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Polygram bid deadline near
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September 17, 1998: 3:48 p.m. ET
EMI drops out, MGM still interested; with bids due Friday, prices fall short
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NEW YORK (CNNfn) - A day before final bids were due to Seagram Co. and its financial advisors, EMI Group PLC has backed out of the bidding for Polygram Filmed Entertainment and prices are believed to fall far short of the $1 billion sought.
Since EMI was widely seen as the front-runner in the bidding, the latest development may cause the film studios and library to be taken off the auction block, people familiar with the situation said Thursday.
Edgar Bronfman Jr.'s Seagram wants to sell Polygram Filmed Entertainment to help finance its $10.6 billion acquisition of Polygram N.V., the music recording label. The Canadian media and beverage company already has completed its $3.3 billion sale of Tropicana Products Ltd. to PepsiCo Inc.
EMI emerged as a front-runner when bidding began earlier this summer. Other interested parties included Metro-Goldwyn-Mayer Inc. and Canal+, a Paris-based television concern.
MGM is planning to make a bid, a person familiar with the matter said. But Canal+ is "ambivalent" about the assets and proceeding "with caution," another source said.
And EMI issued a release to announce "it is no longer considering such an acquisition." The London-based entertainment concern confirmed its interest in Polygram back on Aug. 24.
The final bidding deadline is noon Friday, Sept. 18.
Polygram and MGM declined to comment on the matter. Canal+ couldn't be reached for comment.
Prices are believed to be in the range of $500 million to $600 million, a far cry from the $1 billion that Seagram was hoping for. The figure includes approximately $250 million to $300 million of debt.
So far, bidders have focused principally on the library -- which Polygram acquired from Credit Lyonnais -- rather than studio assets such as Gramercy Pictures.
"If they are only willing to pay for the library value, then I don't think Universal necessarily sells," a person close to the situation said.
Industry analysts agree that although production assets overlap its Universal Studios subsidiary, Seagram doesn't need to sell the Polygram unit because it can use the library.
"They are a distributor. They can always integrate the Polygram library with their own," said David Londoner, media analyst at Schroder & Co.
"You can always basically shut down the production operations," Londoner said.
-- by staff writer Robert Liu
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