MGM and its owner, French bank Credit Lyonnais, would neither confirm nor deny an Australian newspaper report that the studio is negotiating with that country’s richest man, billionaire Kerry Packer, for its acquisition. Both MGM and CL dismissed it as a rumor.
“This is rumor of the week,” according to a Metro-Goldwyn-Mayer spokesman. “The reality is, there’s very little source to it,” he said, referring to the front-page story in today’s Australian Financial Review. The newspaper didn’t give a source for the story.
Report states that Packer, owner of Australia’s Nine Network, is considering paying $ A400 million to $ A450 million ($ 270 million to $ 304 million) for MGM , and that he examined the proposal during a U.S. trip last week with his Australian legal adviser and takeover expert, David Gonski, as well as Bruce Gyngell, who will become Packer’s official Australian TV network chairman in April (Daily Variety, Jan. 13).
However, sources confirmed that neither Packer nor London-based Gyngell were even in Los Angeles last week.
On the other side of the globe, Sydney-based Alex Pollack — a media analyst at Macquarie Equities — told Daily Variety: “He’s certainly capable of buying the studio. He has a strong aversion to debt and most of his assets are ungeared. Given the exposure of Credit Lyonnais, he’d probably offer $ 500 million,” a figure far below the 1990 $ 1.3 billion studio buyout.
No comment from bank
Asked if the bank was flatly denying the report, a New York-based spokeswoman said: “This is the same type of rumor that’s been circulating and it belongs in that category. We don’t comment on rumor or speculation.”
For the past several years, there have been dozens of rumors about MGM being acquired.
According to U.S. banking regulations, CL has until 1997 to divest its ownership interest in financially strapped MGM.
The Nine Network also refused comment about any deal or its industrious owner.
At 56, Packer is worth an estimated $ 1.7 billion, and after a succession of strategic corporate divestments, he’s cashed-up.
About a year ago, Packer said he was bearish about the market. Since then he has been steadily divesting from his huge portfolios. The result is a large cash pile from which to mount further forays.
His Australian Consolidated Press (left to him by his father, Sir Frank Packer) publishes most of the country’s top magazines, while other Australian interests include 10% of the country’s senior bank, Westpac (for which he paid approximately $ 500 million in cash late last year), and controlling interest in the Nine Network.
His U.S. interests include Velassis, the country’s biggest newspaper coupon-insertion business. Within days he is expected to take about $ 100 million for his Chemplex Australia operations from the privately owned U.S. chemical company Huntsman.