Amazon.com Inc (Nasdaq: AMZN) is on track to clinch an agreement to takeover MGM Studios, which co-owns the franchise for James Bond and a few more films and TV series for between $8.5 billion and $9 billion.
As per ‘The Wall Street Journal’s sources, which do not want to be identified, the takeover is anticipated to be announced anytime this week. The stock closed at $3,259.05, up $14.06 or 0.43% from prior close.
The takeover would represent the largest ever completed by the Seattle, Washington-based company since its acquisition of Whole Foods four years back for $13.70 billion.
Amazon wishes to buy a heap of visual content to support its Prime Video service, which rivals Disney+, Netflix, and many more real-time video services. Hence, MGM is a perfect match for its streaming facility because of its series of content.
MGM, which is a privately held entity, was on the outlook for a buyer for many years. Interestingly, Comcast and Apple had estimated the company’s value to be around $6 billion.
Currently, the firm is owned by Anchorage Capital, Solus Alternative Asset Management, Kempner Capital Management, Davidson, Highland Capital Partners, and Owl Creek Investments. The institutions took over MGM in 2010 after the firm came out of bankruptcy.
MGM owns several popular films and TV franchises, including Legally Blonde, Rocky, and Stargate.
The firm also has a studio under its control. Interestingly, the studio has created several hit television programs, including “Fargo” and “The Handmaid’s Tale.” Overall, the firm had a collection of roughly 4,000 films, but several of its characters, for example, The Pink Panther and Chucky the doll, required revival.
The studio has tried several ideas to generate revenue from its movies. It had discussions with Netflix Inc and Apple Inc for streaming its latest James Bond movie. However, the studio has finally opted for a US-wide theatrical release of the film on October 8.
MGM also owns several popular reality TV shows, including “Survivor,” “Shark Tank,” “The Voice,” and “The Real Housewives” series. MGM also offers a high-end pay-tv facility named Epix, which commands a market value of roughly $1.30 billion in 2017.
Amazon spent roughly $11 billion on content for its real-time video and music services in 2020. Additionally, the firm has set aside $1 billion per year for NFL rights.
The acquisition news is expected to keep the stock range-bound with a slight bullish bias in the short term.
The historical price chart indicates that the stock has started rising after consolidating at 3050 levels. The stock also trades above its 50-day moving average, while the stochastics RSI indicator is near the oversold region. Therefore, we are anticipating the stock to gain ground in the days ahead.
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