Earlier this month, the talks had stalled after MGM (MGM) reportedly offered $350 million for the 1,300-title library, which includes such films as The Graduate, The Crying Game, Kiss Of the Spider Woman and When Harry Met Sally.Upon closing of the deal - expected to close in 1999 - MGM will have the world's largest library, with about 5,200 films covering more than half of all Hollywood studio films produced since 1948.
MGM also said it will up its rights offering to $700 million from $500 million.
The PFE library is expected to be a much-needed boost to MGM's cash flow. As holder of the rights to these films, MGM can sell television rights packages to local stations and cable outlets, re-issue them on video, or anything else it wants to do with them.
Analysts have noted that many the weakness of the theatrical film division - a unit that has released bombs like Dirty Work and Species II within the last year - is partly due to a lack of cash.
MGM shares fell 1 1/8 to 8 5/8, or 11.5 percent, while Seagram stock shed 3/16 to 31 9/16.
Written By David B. Wilkerson