TOKYO (AFP) - Sony Corp., which is leading a group of investors to acquire the Metro-Goldwyn-Mayer Hollywood movie studios for nearly five billion dollars, will only pay some 300 million dollars initially in the deal, according to reports.
A Sony spokesman declined to comment on Wednesday`s reports.
Sony would only pay about 300 million dollars because the firm cannot afford a huge investment due to a sluggish household electronics business and the large investment required for semiconductor operations, the Nihon Keizai Shimbun said, without citing sources.
Sony is expected to gradually increase its stake in the US studio by buying out its co-investors, said the Yomiuri Shimbun newspaper, which also reported the Japanese firm would initially spend only 300 million dollars.
Tokyo-based Sony spokesman Keita Sanekata declined to comment on the reports.
"We cannot confirm how much our firm will pay for the acquisition of MGM," he said.
Sony confirmed Tuesday that the consortium led by Sony Corp. of America agreed to acquire MGM for 12 dollars in cash per MGM share, plus the assumption of MGM`s debt, in a deal worth nearly five billion dollars.
The consortium also includes Providence Equity Partners Ltd, Texas Pacific Group and DLJ Merchant Banking Partners.
Standard and Poor`s Ratings Services on Tuesday put Sony`s ratings on Creditwatch with negative implications, saying the deal "may raise Sony`s funding requirements by a larger amount than was originally expected under the company`s medium-term business plan."