Beijing, Sept. 27 (Xinhuanet) -- Sony Corp and a group of investors reached a final agreement to buy Metro-Goldwyn-Mayer Inc for US$12 a share, or about US$2.9 billion, to gain control of one of the world's largest film libraries.

    The group committed US$1.6 billion in equity financing to buy Los Angeles-based MGM and will assume about US$2 billion in debt, Tokyo-based Sony said in a statement. Providence Equity Partners invested US$525 million, Texas Pacific Group contributed US$350 million, Sony and Comcast each invested US$300 million, while Credit Suisse Group's DLJ Merchant Banking put in US$125 million, China Daily reported Monday.

    The purchase doubles Sony's film library to 8,000 titles about 15 years after the company purchased Columbia TriStar Motion Pictures. Sony is seeking to capture more home-video business, estimated to rise to US$26.1 billion in sales and rentals this year, according to a PricewaterhouseCoopers LLP report.

    "With all these parties involved, I don't see how Sony could not turn this into a profitable project," said John Yang, an equity analyst at Standard and Poor's who rates Sony a "buy." Sony is "getting access to a library that could be quite a margin for them."

    The companies expect the purchase to be completed in the middle of 2005. After the close of the transaction, MGM will continue to operate under the Metro-Goldwyn-Mayer name as a private company in Los Angeles. The companies announced an agreement in principle on September 13.

    After the purchase is completed, Sony Pictures Entertainment will co-finance films with MGM and distribute the MGM film and television library, the statement said. Comcast will use the Sony Pictures and MGM film libraries to start a video-on-demand service on its cable-TV systems.

    The addition of MGM, which will bring movies such as the "James Bond" series, will help support Sony Chairman Nobuyuki Idei's vision of a group that supplies both movies and the technology for viewing them.

    Sony and MGM are already partners with Viacom Inc's Paramount Pictures in Movielink LLC, which lets users download movies onto personal computers for US$5 a title.

    "Sony learned a very hard lesson after they purchased Columbia Pictures because they billed quite a loss," S&P's Yang said. "They did well with 'Spider-Man' 1 and 2, and 'Men In Black' 1 and 2, and they did quite well with DVD sales for 'Spider- Man' 1, so they have the know-how."

    Billionaire Kirk Kerkorian's Las Vegas-based Tracinda Corp agreed to vote its shares in favour of the merger. Kerkorian is the president and chief executive of closely held Tracinda.

    The transaction would represent the third time that Kerkorian, who owns 74 per cent of MGM and tried unsuccessfully to merge it with Sony in 2001, has sold the studio.

    MGM shares rose 3 cents to US$11.64 in New York Stock Exchange composite trading. Sony shares fell 30 yen, or 0.8 per cent, to 3,720 as of the 3 pm close of Tokyo Stock Exchange trading on Friday.

    Shares of Philadelphia-based Comcast were unchanged at US$27.93 in NASDAQ Stock Market composite trading.

    (China Daily)