MGM won't confirm report studio is being sold
Wednesday, January 16, 2002
LOS ANGELES -- Shares of Metro-Goldwyn-Mayer Inc. were up 12 percent Tuesday, fueled by speculation the venerable film studio was on the auction block.
A report in the Los Angeles Times Tuesday said MGM had hired investment bank Goldman Sachs & Co. to explore a sale. The report said MGM was seeking about $30 a share, or $7 billion. Investors valued the company at about $5 billion before Tuesday's trading.
Shares of MGM rose $2.39 to close at $22.27 in trading on the New York Stock Exchange Tuesday.
MGM said it has been "regularly evaluating business combination opportunities," but said no agreements have been reached. The company would not confirm it had hired Goldman Sachs or that it was evaluating any offers.
"There can be no assurance that the company will decide to enter into any transaction," the statement said.
Goldman Sachs declined to comment.
The studio has never made a secret of its need to grow, either by acquiring distribution outlets, such as cable television networks, or by merging with a larger player. Last year, MGM paid Cablevision Systems Corp. $825 million to buy a 20 percent stake in four cable channels.
Last October, MGM Chairman Alex Yemenidjian said the company would have to grow much larger in 2002 to compete with other media giants.
"I think we all recognize MGM needs to be part of a larger organization," Yemenidjian said during a conference call to discuss the company's third quarter financial performance. "Our board supports recommendations Chris and I have made that we need to become larger and we need to become larger by mergers and acquisitions. We need to have more scale, we need to have more vertical integration."
Chris McGurk is MGM's chief operating officer.