Sony, the Japanese electronics and media group, on Thursday asked Metro-Goldwyn Mayer for an extension to exclusive negotiations over its $5 billion takeover bid for the independent Hollywood studio.
People familiar with the talks said a consortium led by Sony had asked MGM to extend the negotiating period, which officially ended on Thursday night, for another two weeks.
The move comes as Sony's consortium, which includes the private equity firms Providence Equity Partners and Texas Pacific, closes in on the long-awaited deal. This month MGM postponed its annual meeting to the end of June in order to allow for the talks to be concluded.
MGM on Thursday night had not agreed to Sony's request, but sources close to the talks said the two sides were discussing the terms of an extension, adding that the studio, which is controlled by Kirk Kerkorian, the Nevada billionaire, was likely to agree.
Despite rumors of potential interest from other entertainment groups such as Time Warner and NBC Universal, no other bidders have so far shown an interest in making a competing offer for MGM.
The extension became necessary because Sony and its private equity backers only recently made progress on key issues such as the terms of any exit from the investment and the proportion of money to be injected by each of the partners.
Under the terms of the deal, Sony and its partners will put up approximately $1.5 billion in equity and finance the rest with debt secured against the cash flow from MGM's film library, which contains more than 4,000 titles.
Although MGM's film production division is likely to be closed, Sony has committed to adding at least a few new films to the MGM library every year in order to maintain its value. Some of these would be sequels to existing MGM franchises, which include James Bond and the successful Barbershop movies.
Although Sony has made an indicative offer of $5 billion for MGM's debt and equity, the price is subject to due diligence which required the consortium to examine detailed information in the studio's books.
