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Potential Acquisition Of Metro-Goldwyn-Mayer Likely To Be A Negative Catalyst For Time Warner - CS First Boston Comments

(RealTimeTraders.com) - Following reports about the possibility of merger of Time Warner, Inc. (TWX), and Metro-Goldwyn-Mayer, Inc. (MGM), CS First Boston said it believes a potential acquisition of MGM by TWX at current prices or any premium as a negative catalyst for TWX's stock.

However, analyst William Drewry said TWX is unlikely to pursue such a transaction as the company is still transitioning back to balance sheet stability and fundamental growth. Also, the analyst noted that TWX shareholders suffered following the merger of the company with AOL three years ago.

Drewry believes MGM’s library could provide profit leverage to TWX. However, the analyst believes TWX is unlikely to benefit much from addition of film production capacity in the eventuality of a merger.

On Thursday, MGM closed at $17.05, and TWX closed at $17.87.

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