LOS ANGELES (AP) -- Lions Gate Entertainment has pulled out of the bidding for the beleaguered Metro-Goldwyn-Mayer movie studio after it was told its acquisition offer was inadequate and was asked to raise it.
That's according to a person with knowledge of the matter. The person spoke on condition of anonymity because the bids are meant to be confidential.
The person says Lions Gate is not prepared to pay more than its bid of between $1.3 billion and $1.4 billion and pulled out of the process.
The withdrawal, reported earlier by The Wall Street Journal, means Time Warner's bid to acquire the iconic Hollywood studio for $1.5 billion may be MGM's best chance to avoid foreclosure by its creditors.Nikki Finke weighs in:
From the LA Times:
But what's most interesting to me is that Lionsgate defied Carl Icahn's warning not to do any major deals and did bid for MGM after all. (Yesterday, LG vice chairman Michael Burns wouldn't admit to a bid when interviewed by CNBC.) This is entertaining indeed -- until somebody gets hurt. And, inevitably, that'll be the Lionsgate staff. Management needs to settle with Icahn, and quick, before he raises his hostile bid for MGM and it's too late for them and the company.
The exit of Lions Gate as a potential buyer for MGM leaves only two bidders for the debt-ridden studio. Time Warner Inc. submitted an all-cash offer of $1.5 billion, and investor Len Blavatik's Access Industries put an offer on the table that hinges on a restructuring plan to keep MGM a going concern with reduced debt and an infusion of new capital.
Even Time Warner's bid is below the $2 billion or more that MGM's more than 140 creditors are seeking. A number of other companies, including John Malone's Liberty Media and hedge fund Elliott Associates, passed on making second-round offers after determining that the cash flow projections from MGM's 4,000-title library were too low to justify a big investment.