Time Warner is putting together a nearly $5 billion cash-and-stock offer to acquire film studio Metro-Goldwyn-Mayer to rival a proposal from Sony, according to a source.
Under the deal, Time Warner would offer MGM's 74-per cent stockholder Mr Kirk Kerkorian about $11.50 a share in Time Warner stock and other MGM shareholders about $13 a share in cash, the source said.
Such an offer would total $2.8 billion. Time Warner, which owns the Los Angeles-based Warner Bros. film and TV studio as well as New Line Cinema, would also assume about $2 billion in MGM debt for a total value around $4.8 billion.
But Sony, which has been negotiating to acquire MGM since late April for roughly $5 billion, is still very much in the running, sources close to the talks said, as it has offered a higher price and is far along in doing due diligence on MGM's finances and its coveted 4,000-title film library.
MGM and Sony's movie unit, Sony Pictures Entertainment, both declined to comment. A Time Warner spokesman was not immediately available.
The source who knew of Time Warner's plans said the bid had not yet been formalised. Nonetheless, as recently as six months ago, it had considered an MGM bid and could move quickly toward a deal based on what it learned at that time.