Sony Corp. is in talks to acquire film studio Metro-Goldwyn-Mayer Inc. in a cash deal valued at around $5 billion, media reports said.
News of the discussions sent MGM shares surging on the New York Stock Exchange. Shares of Sony fell on news of the deal.
Sony would join with private equity firms Texas Pacific Group and Providence Equity Partners to buy the legendary studio, CBS MarketWatch reported.
Sony would likely fold MGM into its Sony Pictures Entertainment division. It is not known what would become of the MGM and United Artists labels.
Sony is likely interested in acquiring MGM's library of more than 4,200 titles, including the Pink Panther and James Bond series.
Representatives from Sony Pictures, MGM and Texas Pacific Group declined to comment. A representative from Providence Equity Partners did not return a call seeking comment.
"This news, even if true, won't have such a big impact on Sony overall, since its movie business accounts for less than 10 percent" of its total revenue, Koichi Hariya, an analyst at Mizuho Securities, told CBS MarketWatch. Sony "has been slow to introduce new business models in its key electronics division," which account for about 70 percent of revenue.
"Such a deal, if realized, would likely be a plus, as it would give Sony the rights to more contents and increase its name recognition in the U.S. beyond its core electronics business," said Osamu Hirose, consumer electronics analyst at Tokai Tokyo Research Center. "But the overall effects on the group company are not known."
For nearly two years, MGM has been seeking to become larger either through an acquisition or merger.
The company, which is 74 percent owned by billionaire Kirk Kerkorian, made an unsuccessful bid for Universal Studios last year. Unable to strike a deal, MGM said recently it would pay a one-time special dividend of $8 per share, which would net a $1.4 billion windfall for Kerkorian.
Late Wednesday, MGM reaffirmed its plans to have its board vote as early as next week on management's recommendation to pay the dividend. Earlier reports had speculated MGM would defer the dividend in view of the Sony offer.
If the deal goes through, it will reunite MGM with the backlot it once owned and where historic films such as "Gone With the Wind" were shot. MGM sold its backlot to Sony years ago. The company is the only major studio without its own soundstages or permanent sets.
MGM has struggled with its feature film slate in recent years, producing occasional hits such as "Legally Blonde" and "Barbershop." It also produces the popular "James Bond" series of films.
It also produces television shows and operates cable channels around the world.