Sony ( SNE) is in advance talks to join two buyout firms in a $5 billion acquisition of movie studio Metro-Goldwyn-Mayer ( MGM), according to sources cited by Reuters.
The deal would reportedly include Texas Pacific Group and Providence Equity Partners, and would involve the sale of the entire company -- a transaction that would require the approval of financier Kirk Kerkorian, who owns a 70% stake in MGM. According to Reuters, the current talks involve the three partners splitting a $1.5 billion cash payment and borrowing the rest to finance the deal, which would be a cash transaction that would pay a premium to MGM's market capitalization of $4.1 billion before the news. After trading flat for most of the day, MGM's shares jumped nearly 12% before closing at $19.75 on the news. Any transaction could endanger MGM management's recently confirmed plan to declare a special dividend of $8 a share. Kerkorian stands to earn about $1.4 billion from such a payout.