In America, acquiring a public company is a lengthy and complex process, often taking six months or more. However, MGM has its own peculiarities. Although it's a public company, 92% of the shares are directly or indirectly owned by Kirk Kerkorian. Only 8% of the shares are traded on the market.
Out of this 8%, 5% belong to MGM's managers and executives, such as Charlie Cooper, who owns 1% of the shares. This leaves only 3% in the hands of retail investors.
After the failure of the film "Windtalkers» these 3% of shares were quickly sold off, and Charlie silently acquired all of them. Thus, he became the second-largest shareholder of MGM.
Regarding the shares owned by other managers, Charlie couldn't buy them due to conflicts of interest, but Kerkorian could. Soon, Kerkorian increased his stake to 96%, and together with Charlie Cooper, they effectively controlled 100% of the company.
The next step was to delist the company, allowing them to fully privatize MGM. Afterward, the company was sold to the Coopers. This approach shortened the acquisition time, and the deal was completed in a month.
Public companies can attract funds for development, but for Eric, having an informational advantage, this wasn't necessary. Moreover, the current state of MGM did not inspire market confidence, and an IPO wouldn't attract significant funds.
Note: An Initial Public Offering (IPO) is the process of a company selling its shares to the public for the first time on the stock market.
Issues with government agencies were resolved through financial methods, and all procedures went smoothly.
After the $2 billion was received, information about the sale of MGM leaked to the market. Inside the company, where the atmosphere was gloomy due to the failure of "Windtalkers» the news of the sale sparked interest among mid-to-senior executives, while regular employees showed little reaction.
They didn't care who owned the company. In any case, they wouldn't be fired, otherwise, they would go on strike, as the union wouldn't remain idle.
Among the most interested parties were Sony and Warner Bros. They had long tried to acquire MGM, but their offers didn't satisfy Kerkorian. They had offered $400-500 million for a stake, thus gaining control over the company. They expected to revive MGM and then gradually dilute Kerkorian's stake, getting the company at a relatively low price, although it would take a long time.
However, Kerkorian wasn't interested in such a scenario. He only wanted cash, and in large amounts. All these talks about franchises, studios, directors, and special effects didn't concern him.
Therefore, when Sony and Warner Bros. learned that the deal amount was $2.8 billion in cash, they abandoned their intentions to intervene.
$2.8 billion, even if split in half, would mean $1.4 billion for each company, and in cash. Most importantly, in cash.
Without competitors interfering, the delisting was completed in a month, and the acquisition process went smoothly. Eric and Charlie Cooper attracted the attention of Hollywood studios and Wall Street financial circles.
No one believed they could have raised $2.8 billion on their own. The market thought that the Coopers were working on behalf of some large investor.
Anyway, Eric unexpectedly became a notable figure in Hollywood, and Charlie Cooper's status significantly rose.
Previously, he was just the CEO of MGM, an employee of Kerkorian. Now he was still the CEO of MGM but now owned billion-dollar assets and was a major player in the film industry.
By mid-August, after a month and a half of intense work and spending $800,000 to establish necessary connections, the deal was finally completed. The acquisition speed could be called nothing short of miraculous.
Charlie Cooper thought such haste was unnecessary, as $800,000 could have been enough to shoot a B-movie. However, Eric insisted on quickly closing the deal because the post-production of the films "Red Dragon" and "Barbershop" was nearing completion, and their premieres were imminent.
Both films promised to bring substantial profits, which could have made Kerkorian reconsider the deal terms and demand more money, as had happened before. Moreover, Eric didn't trust other major film studios. Hence, he preferred to close the deal as soon as possible.
In the evening, the Coopers hosted a party attended by only Eric's four best friends and a few friends of his father. The reason for inviting these people was the necessity to make significant changes in MGM's management.
The structure of a film studio is very complex, including departments like marketing, production, creative, administration, finance, and script development, each subdivided into numerous sub-departments.
For example, the marketing department handles graphic design, poster production, advertising placement, and so on, employing over 2,000 people. In total, MGM hires more than 3,000 employees, requiring several million dollars in salaries every month.
However, 3,000 employees is small compared to Warner and Disney, where the workforce exceeds 80,000 worldwide. Among the seven major Hollywood studios, MGM has the fewest employees, reflecting its declining state.
Even with 3,000 employees, the company faces numerous problems. Although Charlie Cooper is the CEO, he can't fully control the situation, and many within the company oppose him. Therefore, from the beginning of the deal, he started contacting executives from several smaller companies, inviting them to take key positions at MGM, replacing the disobedient staff.
As for Judy, Warren, Bordeaux, and Billy, it's still too early to give them executive positions. They need to undergo training and gain experience before being entrusted with significant roles.
Gathered around the grill, Eric took a big gulp of beer and said, "I've been insanely busy lately, but now it's all done. Are you ready to enter the industry?"
Hearing this, all four immediately began to speak up.
"Well, since we've come this far, is there a better choice? Ha-ha-ha."
"Yeah, I invested $3 million. Though it's a drop in the ocean, I'm also a shareholder,
right?"
"The film industry... Looks like I see a lot of beautiful women ahead."
"Seriously, Eric, what positions are you offering us?"
Eric flipped the meat on the grill: "First, you'll undergo training in various
departments for two months. I want you to learn all aspects of your department's
work during this time and identify your strengths. Besides, you'll have a few tasks
that I've prepared for you."
"What tasks?"
"A variety of them, such as searching for and acquiring rights to promising comics,
novels, games, and so on."
"Like 'Spider-Man'? Right now, it's the box office champion in North America!" said
Warren.
"Or 'Resident Evil.' I haven't played the game, but I liked the movie, and Milla
Jovovich was so sexy after the infection! Plus, the movie had great box office
returns."
Eric nodded: "Right. Zombies are a very popular theme. I also plan to make a TV series on this topic, and you'll need to conduct market research to ensure there are no issues with the rights to this project. Once you start working, handle this with the marketing department."
"Additionally, there's 'Transformers,' which have huge adaptation potential. The rights belong to Hasbro. We need to snatch this juicy piece before competitors do."