In a move to further tip the scales in the topsy-turvy auction of Metro-Goldwyn-Mayer, Time Warner Inc. has switched its bid to cash, The Post has learned.
Time Warner had originally proposed a deal that would have given MGM controlling shareholder Kirk Kerkorian as much as $11.50 a share in unregistered Time Warner stock.
But now, the media giant is offering an all-cash offer worth between $4.5 billion and $4.6 billion, a source familiar with the situation said.
The move is aimed at giving Time Warner a leg up on its rival, a Sony Corp.-led consortium backed by three private equity firms, which has had an all-cash offer of nearly $5 billion for the legendary film studio on the table since April.
Although Time Warner is offering a lower price, its deal is viewed as more straightforward and certain to close than the complex structure put forth by Sony.
Time Warner’s previous stock bid had been widely seen as more appealing to MGM because it could offer Kerkorian a more tax-advantaged deal.
However, sources familiar with the situation said that the private stock had certain lock-up restrictions that would have created potential liquidity risks for the octogenarian mogul.
Time Warner, which cannot issue public stock because of an ongoing Securities and Exchange Commission investigation into accounting at its America Online unit, decided that simply writing a check might prove a more appealing option.
MGM has been entertaining sales talks with both parties for months, but the company appears finally to be getting closer to a deal.
Sources familiar with the matter say MGM’s board may meet to pick a winner as soon as next week.
Although MGM has not made a decision yet on which deal they prefer, sources say Time Warner appears to have gained ground on its rival in its negotiations.
“Last week, Sony had a slight edge,” said one person familiar with the negotiations. “This week, Time Warner seems to be ahead. But that, too, could change.”
The discussions with both parties are at a delicate stage and could still crater, sources warned.
MGM shares closed up 70 cents, or 6 percent, at $12.10 yesterday.
A spokesperson for MGM was not available for comment.
The Sony deal, which is backed by Texas Pacific Group, Providence Equity Partners and CSFB Private Equity, offers a higher price of nearly $5 billion, but has a more complex structure and less certainty of financing, said a source.