Lions Gate Entertainment proposes to buy MGM for $1.8 billion

Lions Gate Entertainment Corp, the most commercially successful independent film and television distribution company in the US, has proposed acquiring Metro-Goldwyn-Mayer (MGM), one of Hollywood's oldest movie studios in a deal reportedly valued at around $1.8 billion.

Santa Monica, California-based Lions Gate yesterday said that it has sent a proposal for a merger to MGM.

Billionaire investor Carl Icahn, who owns significant stakes in both Lions Gate and MGM, said that the deal would benefit shareholders of both companies.

In a filing with the US Securities and Exchange Commission, Lions Gate said that three of its largest investors, Icahn, MHR Fund Management and Capital Research Global Investors, who collectively own 71 per cent of Lions Gate, all support the deal.

Los Angles-based MGM had last week announced that it plans to enter into a prepackaged bankruptcy in order to deal with its $4 billion debt.

The announcement came after the legendry studio had rejected a $1.5 billion takeover offer from Time Warner and a $2 billion offer last month from India's multi-business Indian conglomerate Sahara India Pariwar. (See: MGM rejects Sahara's $2 billion takeover bid, says Subrata Roy