Share-deal ban stokes MGM takeover hopes

MOVIE studio Metro-Goldwyn Meyer has reportedly banned some of its staff from buying or selling its shares, stoking speculation that a multibillion-dollar takeover of the group could be days away, with Time Warner the favoured candidate.

Time Warner has been jousting with a consortium led by Japanese giant Sony to buy MGM, whose most soughtafter asset is its film library, which contains thousands of well-known titles, including the James Bond series. MGM has now prevented certain staff from trading its shares, according to reports citing an internal company memo.

Such restrictions are often introduced by companies subject to protracted takeover battles. Preventing key staff from trading their employer's shares is the surest way of preventing any suggestion that they benefited unfairly from insider knowledge.

MGM sources are also quoted as saying that Time Warner was ahead in the race to do a deal, and could offer as much as $5 billion (Pounds 2.7 billion). Sony was still said to stand an outside chance, however. The latest developments cap a corporate saga that has already run for most of this year.

Sony, supported by Texas Pacific and Providence Equity Partners, opened exclusive talks with MGM on a takeover in March but failed to seal an agreement by May, when it was the only bidder at the table.

Time Warner then announced its interest in MGM and has since mounted an aggressive campaign to snare the studio from under the nose of its Japanese rival to consolidate its hold of filmmaking interests.

Time Warner already owns the Warner Brothers and New Line Cinema studios, and a successful swoop on MGM would strengthen its hand considerably in Hollywood.

The key player in the protracted negotiations is Kirk Kerkorian, the billionaire investor who holds 74% of MGM. His willingness to accept a mixture of cash and shares, or ask for full payment in cash, will be critical to which party emerges at the victor. Accepting cash only would hand Kerkorian a substantial tax bill.

MGM shares closed overnight at $11.40. Reports have suggested Time Warner is now willing to offer Kerkorian as much as 10 cents more than that, in Time Warner paper. Other MGM shareholders could be offered a better rate - perhaps as much as $13 - but would receive cash.

Kerkorian has dominated business headlines this year, suing DaimlerChrysler over its 1998 merger, saying the deal was in fact a takeover of the US concern by the German company. The billionaire is also embroiled in a insider trading case connected to the carmaker.

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