Sony-led group makes final bid to wrest MGM

The Sony-led group, which includes the buyout firms Providence Equity Partners, Texas Pacific Group and DLJ Merchant Banking Partners, struck the deal with MGM just 24 hours before the studio had scheduled a board meeting to approve a deal with Time Warner. If the transaction is completed, it will be the third time that Kirk Kerkorian, MGM’s controlling shareholder, has sold the company since he first acquired shares in it in 1969.

Final details of the deal are being worked out and it is subject to approval by both boards.

The deal caps a come-from-behind story for Sony, which originally bid for MGM in April, but was unable to complete the deal after becoming bogged down in negotiations with its backers, opening the field to a rival offer from Time Warner.

With the last-minute addition of Comcast to the Sony-led consortium — a pact that was negotiated over the Labour Day weekend on Martha’s Vineyard, where executives from Sony and other investors converged on the summer house of Brian L. Roberts, Comcast’s chairman — the group decided to raise its bid to $12 a share from $11.23 and sweeten its offer by offering a non-refundable $150 million deposit. Time Warner had offered $11 a share.

The Sony-led group could justify the higher bid because part of its deal with Comcast calls for the creation of several premium cable channels that will broadcast both Sony and MGM movies — an additional revenue stream. Comcast will also offer the movies through its video-on-demand service.

To keep Comcast’s role secret, MGM and even bankers for the Sony-led group were kept in the dark until the last moment. Time Warner pulled its offer off the table when it learned early yesterday that the Sony-led group appeared to be the winner. —(NYT)