A group led by Japan's Sony struck a tentative deal last night to acquire Hollywood's last major independent studio, Metro-Goldwyn-Mayer, for nearly $5 billion.
The studio, a now frayed symbol of cinema's golden age, made the announcement hours after US media giant Time Warner dropped its bid for the studio symbolised by the famous roaring lion.
The coup by Sony and its partners in acquiring the venerable studio that made cinema classics including 'The Wizard of Oz' and 'Singin' in the Rain,' and its precious film library, ended an era in Hollywood history.
In a statement, MGM said it had 'reached an agreement in principle on the terms of a merger' with a consortium that includes Sony Corporation of America, Providence Equity Partners, Texas Pacific Group and DLJ Merchant Banking Partners.
Under the deal, Sony's consortium agreed to pay to $12 a share, or a total of around $2.94 billion, for MGM, and also undertook to assume its debt of around $1.9 billion. In addition, the investors put down a $150m deposit, which is reportedly non-refundable, after five months of intense and secret negotiations.
The deal also means that Sony and its partners will also win control of MGM's United Artists distribution unit, which was founded by Charlie Chaplin, Douglas Fairbanks and Mary Pickford in 1919.
The announcement ended months of fierce speculation over the fate of one of Tinseltown's oldest studios and came after Sony upped its offer at the weekend, snatching the prize away from Time Warner at the last minute.
Time Warner earlier withdrew its offer after being outbid, refusing to pay more than $11 a share towards a total offer of between $4.5-4.6 billion. It said in a statement that while MGM was a tempting acquisition, the bidding had become too rich for the US group's taste.
While it is a mere shadow of the MGM that was Hollywood's most powerful studio from the 1930s to the 1950s, the studio still boasts a precious film library of 4,100 films including the 'James Bond' and 'Pink Panther' series.
Sony, which already owns a major Hollywood studio, Sony Pictures Entertainment has been in acquisition talks with MGM since April.
