Corporations: The Coup That Won MGM

Kirk Kerkorian, 52, who built his $275 million fortune on airlines, hotels and Las Vegas gambling, last week added another potentially rich prize to his leisure and travel domain. He won control of Metro-Goldwyn-Mayer, the ailing moviemaker, with a stunningly successful tender offer for some $26 million of its common stock at $42 a share. In August, Kerkorian had picked up 22% of MOM’s stock through another tender. Now his holdings will rise to at least 32% and perhaps to as much as 45% of the company’s shares, depending on how much of an estimated $59 million worth of proffered MGM shares he actually buys.

Whatever his decision, Kerkorian should be able to wrest MGM’s reins from Edgar Bronfman, who is president of Seagram’s, chairman of MGM and owner of about 16% of MGM stock. (TIME Inc. owns 5%.) Bronfman strongly opposed Kerkorian’s first tender offer but took no position on the second. Kerkorian flew to Manhattan last week to meet MGM executives but kept silent as to whether he will try to oust Bronfman or President Louis (“Bo”) Polk from their MGM posts.

The coup was shrewdly timed. Before Kerkorian started bidding, MGM stock had dropped from a 1968 high of $55 to $29 a share. The company recently estimated that it lost at least $25 million during the fiscal year that ended Aug. 31. Most of the deficit, however, grew out of MGM’s decision to write off as losses some box-office flops and a great part of its slow-selling inventory of monaural records. Kerkorian thus bought into a company that may be poised for a turnaround. Bronfman has already predicted a profit for MGM in fiscal 1970.