MGM and Sony finalise buyout deal details

In a press release issued by Sony Corporation of America, details of the final deal between MGM and the Japanese firm have been announced.

A consortium led by Sony Corporation of America and its equity partners Providence Equity Partners, Texas Pacific Group, Comcast Corporation and DLJ Merchant Banking Partners, together with Metro-Goldwyn-Mayer Inc., announced today that they have entered into a definitive agreement under which the investor group will acquire MGM for $12.00 in cash per MGM share, plus the assumption of MGM's approximately $2.0 billion in debt.

The investor group has committed a total of $1.6 billion in equity financing to acquire MGM as follows: Providence Equity Partners -- $525 million, Texas Pacific Group -- $350 million, Sony Corporation of America -- $300 million, Comcast Corporation -- $300 million, and DLJ Merchant Banking Partners -- $125 million. JP Morgan Chase has committed to lead a bank syndicate to provide up to $4.25 billion in senior debt financing together with Credit Suisse First Boston.

From today until closing, MGM will continue as an active producer of film and television projects, and will continue to greenlight projects under the MGM and United Artists banners in the ordinary course of business consistent with its current business plan. Following the closing of the transaction, MGM will continue to operate under the Metro-Goldwyn-Mayer name as a private company headquartered in Los Angeles.

Also following the close, Sony Pictures Entertainment will co-finance and produce new motion pictures with MGM as well as distribute MGM's existing film and television content through Sony Pictures' global distribution channels.

As previously announced, Comcast, Sony Pictures Entertainment and the equity partners in the MGM transaction have agreed to a broad programming and distribution arrangement that will allow for the distribution of Sony Pictures' and MGM content on Comcast's video on demand platform, and for the creation of a joint venture, to be managed by Comcast, establishing new cable channels featuring Sony Pictures and MGM content.

"We are delighted to be able to make this announcement today together with our partners," said Sir Howard Stringer, Chairman and Chief Executive Officer, Sony Corporation of America. "We all look forward to preserving and enhancing the legendary franchise that is MGM, and to ensuring that its extraordinary content continues to be enjoyed by people around the world."

"This is a compelling strategic transaction that will give MGM the ideal partners to build on its unique legacy," said Alex Yemenidjian, Chairman and CEO of MGM. "This transaction will deliver the full value of MGM to our shareholders, while creating significant value-creation opportunities for the new owners and expanded options for consumers to enjoy MGM's content."

"This transaction presents a unique opportunity to enhance the value of MGM's exceptional film library through the world-class distribution capabilities of both Sony and Comcast," said Jonathan Nelson, Chief Executive Officer of Providence Equity Partners Inc. "We look forward to working closely with our fellow investors to increase the value of MGM's content in the years ahead."

"We are delighted to join with such a powerful group of partners in this acquisition of a truly legendary entertainment company," said Kelvin Davis, partner, Texas Pacific Group. "We're excited about the opportunity to build upon the unique film franchises which MGM has developed over its distinguished history."

Comcast Chairman and Chief Executive Officer Brian L. Roberts said, "This is a terrific partnership. We are delighted to be working with Sony and the other partners to substantially expand the content available to our customers, and our direct investment further underscores our excitement over this opportunity."

"We believe this landmark transaction -- partnering with two great global entertainment companies -- is an exciting opportunity for both our partners and investors," said Thompson Dean, Managing Partner of DLJ Merchant Banking Partners.

The transaction, which has been approved by the Board of Directors of MGM, is subject to the approval of MGM shareholders, various regulatory approvals and customary closing conditions. Tracinda Corporation and 250 Rodeo Inc., MGM's principal shareholders, have entered into a Voting and Support Agreement agreeing to vote their shares in favor of the proposed merger. The merger agreement contains no financing contingency. The transaction is expected to close in mid-2005. Employees of MGM and its subsidiaries will have the opportunity to be considered for available positions that may arise as a result of the transaction.

Thanks to `JP` for the alert.

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