Lions Gate seeks MGM deal, gets Icahn's support
By Sue Zeidler and Paul Thomasch
LOS ANGELES/NEW YORK (Reuters) - Lions Gate Entertainment Corp has proposed merging with Metro-Goldwyn-Mayer in a deal valuing one of Hollywood's oldest movie studios at $1.6 billion to $1.8 billion, a source familiar with Lions Gate's strategy said.
The proposed deal by Lions Gate for the troubled studio and home to the "James Bond" films won the backing of corporate raider Carl Icahn, an investor in both studios, who once compared a merger to a cash-strapped couple who decide to buy an "overpriced" mansion.
The Lions Gate offer would turn over about 20 percent to 25 percent of the combined company to Icahn, the source said. In a filing, Lions Gate said the combined company would be owned by its shareholders and MGM's creditors.
"We believe this proposal as submitted is far better for MGM holders than the current proposal to combine MGM with Spyglass," Icahn said in a statement.
A second source familiar with the situation told Reuters that Icahn, who is intent on sealing a deal, had already courted and opened discussions with several of MGM's creditors, and is angling to secure two seats on the board if a deal goes through.
The overture by Lions Gate, which produces the hit TV series "Mad Men," is the latest chapter in MGM's years-long saga to survive as it struggled with some $4 billion in debt. It has spurned earlier offers from Lions Gate, Time Warner Inc and others.
On Tuesday, MGM lawyers and bankers involved in the bankruptcy process were expected to have met to discuss the Lions Gate plan, adding it was unclear whether the proposal was superior to the nonbinding Spyglass deal, another source said.
Ahead of Lions Gate's actions, MGM had intended to move ahead with a prepackaged bankruptcy plan under which Spyglass Entertainment would contribute certain assets in return for a roughly 5 percent stake in the reorganized MGM, a person familiar with the discussions said. Continued...