A group headed by Sony Corporation of America has agreed to buy Hollywood film studio Metro-Goldwyn-Mayer for about $2.85 billion in cash to mine MGM's lucrative library for the booming DVD market.
MGM, the 80-year-old studio that owns the James Bond movies, said on Monday that the unit of Japanese electronics giant Sony would be joined by Providence Equity Partners Inc., Texas Pacific Group and DLJ Merchant Banking Partners.
Sony said it had also reached a separate agreement with the top US cable TV operator, Comcast Corp., for Comcast to offer Sony and MGM movies over its video-on-demand systems and on new cable channels that it will form with the Sony group.
Emerging as victor in a drawn-out acquisition battle with Time Warner, Sony will join forces with MGM to create the world's largest film library of about 7,600 titles, comprising some 3,500 movies from Sony and about 4,100 from MGM.
Sony will pay $12 cash per share for MGM, controlled by billionaire Kirk Kerkorian, and assume about $2 billion of debt.
With roughly 237.6 million MGM shares outstanding at the end of July, the total value of the deal is about $4.85 billion.
The purchase of MGM is in keeping with Sony Chief Executive Nobuyuki Idei's vision of creating synergies between his company's consumer electronics products and music, movies and games.
But investors said it would be some time before the potential merits of the deal become clear.