HOLLYWOOD -- Metro-Goldwyn-Mayer Film Co. bought United Artists motion pictures studios from Transamerica Corp. Tuesday for $380 million.
MGM paid $250 million in cash as the purchase was completed and signed a six-year promissory note to pay the $130 million balance at 12 percent annual interest.
The combined assets of the two studios will exceed $1 billion and initial annual revenues will exceed $500 million, MGM chairman Frank Rosenfelt said.
The deal was made May 27. MGM took out a $250 million bank loan, which must be repaid by May 14 of next year. The studio's stockholders agreed Monday to sell more shares to help finance the United Artists purchase.
Principal stockholder Kirk Kerkorian will buy $110 million worth to help pay for the United Artists acquisition.
United Artists Corp., founded in 1919 by Charlie Chaplin, D.W. Griffith, Mary Pickford and Douglas Fairbanks, has a 2,500-film library and serves as distributor of MGM Pictures in the United States and Canada.
The studio has a history of box officer winners, including 'Casablanca,' 'The Maltese Falcon,' 'West Side Story,' 12 James Bond films, the Pink Panther series, 'Rocky' and 'Rocky II.'
Rosenfelt said MGM planned to release 14 new pictures in the next year and that United Artists would operate as a separate entity.
'As a result of our long experience in the motion picture business and particularly as a result of our close contractual association with United Artists during the past eight years, we were well aware of the asset values inherent in that company,' Rosenfelt said.
'There is enormous synergy inherent in this transaction, which we believe will be most beneficial for the future of both MGM and United Artists.'
James Harvey, Transamerica president, said the corporation sold United Artists to streamline its operations.
'This sale will enable us to concentrate on our financial services businesses ... as well as on our travel and manufacturing businesses. We feel we received a very good price for United Artists, to the benefit of our shareholders, and that United Artists under MGM will continue to grow and play a leading role in the entertainment industry.'
