Anchorage Capital Group, MGM Holdings Inc.’s largest shareholder, has made about $2 billion in paper profits with
agreement to purchase the famed Hollywood studio behind James Bond.
Anchorage is among a group of hedge funds that has been waiting a decade or more for a sale or public offering of the studio on the strength of its content library. They were rewarded with the deal by Amazon to buy MGM for about $8.5 billion, including about $2 billion in debt.
New York hedge fund Anchorage began telling investors about its paper profit Wednesday. Anchorage invested less than $500 million in 2010, making for an IRR, a return metric that takes into account the length of an investment, of about 16%.
The deal took the return of Anchorage’s flagship hedge fund from 8% to 18% this year, said a person briefed on Anchorage’s performance. Anchorage co-founder
chairs MGM’s board and had been negotiating with Amazon.
The $6.5 billion equity value of the deal is around what MGM’s then-chief executive,
was discussing with
in early deal talks for the studio in 2018. Those talks were cut short when MGM’s board ousted Mr. Barber for having the unsanctioned talks. Some MGM shareholders said Wednesday it was possible those talks could have resulted in a similar deal, years earlier, had they continued.
Still, longtime MGM investors on Wednesday, and even newer shareholders, can claim strong returns on the deal if they realize their profits.
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