Lions Gate eyes a merger with MGM

 
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AMERICAN film studio Lions Gate Entertainment proposed a merger with troubled rival Metro Goldwyn Mayer (MGM) yesterday, in a move to end months of tussling over the ownership of both firms.

Lions Gate’s biggest shareholder, corporate activist Carl Icahn, gave the merger offer his blessing yesterday, saying in a statement that such a deal would “enhance value for all constituencies”.

Icahn also holds $500m (£316.5m) of MGM’s debt, and has spent the last year bidding to take over Lions Gate.

Terms of the offer have not been disclosed, but reports last night said MGM’s creditors would own 55 per cent of the combined company. Icahn said in a regulatory filing he preferred Lions Gate’s offer to an earlier deal offered by Spyglass Entertainment.

MGM, home to the James Bond films and a new remake of The Hobbit, asked its creditors last week to accept a pre-packaged bankruptcy plan in which Spyglass would take 95 per cent of MGM’s shares in exchange for more than $4bn of its liabilities.

Creditors have until 22 October to agree to this arrangement, the same days that Icahn’s latest bid to take over Lions Gate expires.

Lions Gate said yesterday’s offer “follow[ed] detailed discussions” with Icahn, suggesting it has set aside its differences with Icahn in pursuit of MGM.