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Film studios discuss possible merger

MGM and Lions Gate consider deal

25 June 2010

Film studios Lions Gate Entertainment and Metro-Goldwyn-Mayer (MGM) are in discussions over a possible merger.

The two firms have been looking to tie up a deal in recent years as they are both of similar size.

However, while Lions Gate had success with TV shows such as Weeds and the hit horror film franchise Saw, MGM has struggled to deal with its $3.7 billion (£2.48 billion) debt.

The firm was acquired by a Sony-led consortium in 2005, but lenders have recently taken control to try and turn around the flagging business.

A possible takeover bid has been mooted but only Time Warner remain in contention as MGM rejected offers below $1.5 billion (£1 billion)

One possible obstacle to a merger is opposition from one of Lions Gate's chief shareholders, Carl Icahn, who recently raised his stake in the firm to 31.8 per cent.

A source told the Financial Times that any deal with MGM would need to be approved by Mr Icahn, who has expressed his criticism of a bid in the past.

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