Kerkorian Rejected Bid of $1 Billion for MGM/UA

Kirk Kerkorian, who owns about 80% of MGM/UA Communications, recently turned down an offer of more than $1 billion for the movie company from a firm based in the principality of Monaco, sources said Wednesday.

Los Angeles lawyer Howard Weitzman, who represented the interested party, confirmed the report from an entertainment industry source.

Weitzman said he did not learn whether Kerkorian was simply uninterested in selling or whether he did not want to sell at the offered price.

He also confirmed that the Monaco firm, identified as Elizabeth Dickenson Industries, was interested in having former UA Chairman Anthony Thomopoulos run MGM/UA under new ownership. Thomopoulos resigned in late September.

Longtime Kerkorian representative Stephen D. Silbert declined to comment on the reported offer when reached late Wednesday at MGM/UA headquarters in Beverly Hills.

Disclosure of the offer came in the same week that investment banker Jeffrey C. Barbakow took over from Silbert as MGM/UA chairman, president and chief executive. Silbert, who took a position with Kerkorian’s privately owned investment firm, continues as an MGM/UA director and will remain with the company until Jan. 15 to help Barbakow with the transition. Barbakow said Wednesday through a spokeswoman that he also had no comment.

Barbakow and two lieutenants resigned from the Los Angeles offices of Merrill Lynch Capital Markets to help MGM/UA implement a recently announced plan to raise $200 million as part of a new restructuring plan.

At the time the plan was announced, Silbert denied reports that a sale of the MGM or UA segments of the company was under consideration. Last spring and summer, MGM/UA actively was seeking buyers for all or parts of the company, and one such deal fell through in late July.

Weitzman said, in response to questions, that he “independently” checked out the Monaco firm’s ability to make a bona fide offer of the size reported. He said the firm’s holdings include hotels, real estate in various countries, an interest in a pharmaceutical company and a helicopter manufacturer in France.

A securities analyst, who asked not to be identified, said he was “surprised that Kerkorian would turn down an offer that large.” The reported offer could approach $1.5 billion with MGM/UA’s debt included.

The analyst said it appeared earlier that Kerkorian would be receptive to an offer of $20 a share, which would mean a bit more than $1 billion to holders of MGM/UA’s 50.1 million shares outstanding.

The stock was trading at about $13.50 a share a month ago, when the Monaco offer was reportedly made. At that market price, the company would have been valued at about $676 million. Since then, the stock has been trading for about $2 a share less, making the market value about $576 million.