Advertisement
YOU ARE HERE: LAT HomeCollections

Company Town

PolyGram Makes Bid for MGM; Value Put as High as $1.3 Billion

Acquisitions: Sources say it, News Corp. and Morgan Creek are likely front-runners.

June 28, 1996|CLAUDIA ELLER | TIMES STAFF WRITER

After a 10-hour meeting Thursday in the Netherlands with Dutch parent Philips Electronics, entertainment giant PolyGram put its official bid on the table Thursday for the Metro-Goldwyn-Mayer studio, according to a source close to the company.

Sources estimate the bid at between $1 billion and $1.3 billion. A PolyGram spokeswoman said company executives had no comment, but sources said it was an all-cash offer.

PolyGram, whose music division is No. 1 internationally and third in America, owns several film labels, including Interscope Communications, Working Title, Propaganda and Gramercy Pictures. The company has long wanted to be a major Hollywood player and has plans to launch its own domestic distribution operation next year. It already has its own international distribution in most major markets.

The acquisition of MGM would not only help in its distribution efforts, it would give PolyGram a sizable studio library to license throughout the world.

It is unclear how soon investment bank Lazard Freres & Co., which is handling the sale, will sort through the various bidders, including Rupert Murdoch's News Corp., producer Arnon Milchan's New Regency, producer James G. Robinson's Morgan Creek, the current MGM management led by Chairman Frank Mancuso and a group that includes former Drexel Burnham Lambert executive Peter Ackerman and German businessman Rolf Deyhle's Capella Films. The bids were officially due Monday, but there apparently was flexibility that allowed for PolyGram's later offer.

On Thursday, sources suggested that the likely front-runners were PolyGram, News Corp. and Morgan Creek. The bid from News Corp., which owns the 20th Century Fox film studio, is said to be a $1-billion all-cash offer, according to sources.

They said none of the half a dozen finalists came near the $1.5 billion to $2.5 billion that French bank Credit Lyonnais, MGM's owner, had sought.

The bidding brings into the final stages the four-year odyssey of MGM, which was seized by Credit Lyonnais in 1992 from Italian financier Giancarlo Parretti after he defaulted on his loans. The bank last year spun the company off into a new holding company, Consortium de Realisation, which is charged with getting rid of billions of dollars of the bank's assets.

CDR must sell its controlling stake in MGM by May 1997, according to U.S. banking laws.

The most attractive element to bidders is MGM/UA's library of about 1,600 films, which companies can exploit and sell as packages to foreign television. Titles include 17 James Bonds films, the "Rocky" series, "West Side Story," "Annie Hall," "Raging Bull" and "Thelma & Louise."

Advertisement
Los Angeles Times Articles
|
|
|