MGM announced Tuesday evening that it is withdrawing its $11.5 billion all-cash offer for Vivendi Universal Entertainment, the U.S. media and entertainment subsidiary of Paris-based
Almost simultaneously, Las Vegas billionaire Kirk Kerkorian -- the octogenarian who owns two-thirds of MGM's stock -- announced a tender offer for 19% of the company's shares that he doesn't already own.
In after-hours trading Tuesday, MGM's shares jumped $1.92, or 15%, to trade at $14.76. Vivendi's shares dropped a penny from their official closing price of $18.51.
While the impact of MGM's move on Vivendi's auction of VUE is unclear, Kerkorian's offer for MGM shares illustrates once again Kerkorian's unflagging restlessness as far as the value of his investments is concerned.
"We believe that recent trading prices of MGM's common stock do not reflect MGM's full value and that the stock represents an attractive investment," Kerkorian said in a statement. "This tender offer demonstrates our confidence in MGM and our commitment to the company's future."
Kerkorian is offering to pay up to $240 million, or $16 per share, for as many as 15 million shares of MGM's common stock. That price represents a 24.6% premium over MGM's closing price of $12.84 Tuesday.
In contrast, MGM says it doesn't believe VUE is much of a value. "The VUE assets are attractive and would fit well with MGM," chief executive officer Alex Yemenidjian said in a statement. "Unfortunately, meeting the seller's current price expectation would not be consistent with our valuation of the assets."
MGM didn't make clear in its statement whether VUE had requested a higher bid, or whether MGM had decided that the assets for which it had bid were not worth as much as the company had believed originally. An MGM spokeswoman wasn't immediately available for comment.
Though a handful of buyers -- including
-- are still in the running for all or part of VUE, MGM's move adds to chatter that Vivendi Universal may be too optimistic in the price it seeks to get for assets such as Universal Studios, the Sci Fi Channel and its theme parks.
In a statement that, like MGM's, could be interpreted by outsiders as meaningful or just posturing, Vivendi Universal Chief Financial Officer Jacques Espinasse said last month the company
could do an initial public offering of VUE's shares as an alternative to an asset sale. "We are not in a corner," Espinasse said at the time. "There is a floor under which we will not go."