Qintex Tops Murdoch With Successful $1.5 Billion Bid for MGM-UA
BEVERLY HILLS, Calif. (AP) _ Australia’s Qintex Group won a brief but bitter bidding war for MGM-UA Communications Corp. on Friday with a successful $1.5 billion buyout offer, topping media magnate Rupert Murdoch by $100 million.
Kirk Kerkorian, who owns 82 percent of MGM-UA, already had sold many of the assets of the old MGM and United Artists studios. The high price was attributed to MGM-UA’s vast movie library, and alluring asset at a time of strong worldwide demand for U.S. entertainment.
″We believe the global development of not just television but movies is going to exceed inflation by a wide margin,″ said John Lloyd, Qintex’s chief financial officer.
Kerkorian had been seeking a buyer for all or part of the company for 18 months. Nearly every big American company with entertainment holdings, as well as Japan’s Sony Corp., had expressed interest.
Qintex announced a deal in April to buy MGM-UA’s United Artists studio and some other assets for $600 million. At the time, the Fox Inc. unit of Murdoch’s News Corp. was the final suitor to drop out of the bidding.
In a surprise move Wednesday, Murdoch bid $1.4 billion for all of MGM-UA. But negotiations between MGM’s board and Murdoch’s News Corp. and its Fox Inc. unit broke down late Thursday.
By bettering Murdoch’s deal for all of MGM-UA, Qintex Chairman Christopher Skase turned the tables on his fellow Australian. Murdoch, whose holdings include the Fox studio, had hosted a cocktail party to introduce Skase to Hollywood’s elite after the Qintex deal was announced in April.
When Murdoch re-entered the picture Wednesday, Skase was in the process of buying for $8 million the palatial Los Angeles estate of the late Edie Goetz, the daughter of the late Louis B. Mayer, one of MGM’s founders.
A source close to Skase, speaking on condition of anonymity, said Skase had been angered by Murdoch’s offer, although not surprised by it.
Neither Murdoch nor Skase was available for interviews Friday.
Murdoch spokesman Howard Rubenstein said MGM-UA had asked Murdoch to bid for the company. ″He thought he had a deal, but then the transaction fell apart,″ he said, declining further comment.
In buying MGM-UA, Qintex also will assume $400 million in MGM-UA high-yield bond debt. It also promised to make a non-refundable $50 million deposit on MGM-UA ″promptly.″
Qintex owns an Australian television network and 43 percent of a U.S. company that produces TV movies and specials, including the ″Lonesome Dove″ miniseries.
Qintex officials said MGM-UA’s 4,000-picture movie library, the largest of any studio, was the main attraction. European and Asian markets for U.S. movies and television are booming, and the films can be packaged and sold for distribution in many forms.
The 1,000-movie United Artists library includes the ″Rocky,″ ″Pink Panther″ and James Bond pictures.
Ted Turner owns worldwide television broadcast rights and domestic pay-TV rights to the 3,000-picture MGM library, which includes pre-1950s Warners Bros. releases and includes ″Casablanca,″ ″Singing in the Rain,″ ″Gone With the Wind″ and ″The Wizard of Oz.″
But Qintex will get domestic and foreign home video rights to that library, as well as non-U.S. pay-TV rights.
Lloyd said Qintex also plans to expand MGM-UA’s in-house film production to 15 to 20 per year.
After sputtering as Kerkorian bought and sold pieces of the company, MGM-UA produced a dozen films last year, including Oscar-winner ″Rain Man.″ But during negotiations for the sale of the company, film production has ground to a halt.
Lloyd said there are no immediate plans to sell MGM-UA assets.
Murdoch, whose four-continent TV, newspaper and magazine empire is valued at more than $8 billion, also sought MGM-UA’s movie library as programming for his Fox TV network here, fledgling satellite television networks in Britain and other enterprises.
Lloyd said Qintex’s financing probably would be about half in bank loans and half in cash from a consortium of unidentified European and Asian investors.
MGM Grand Inc., a Kerkorian-controlled company that operates a first-class airline and Nevada casinos, will buy back the MGM-UA headquarters building from Qintex in October for $43 million or its independently appraised value. MGM-UA will make about $26 million on that deal, the company said.
A Sept. 23 shareholders meeting to consider Qintex’s earlier offer was canceled.