Pathe Says Talks to Buy MGM Are Continuing

Pathe Communications late Monday said it was “continuing discussions” about details of a plan under which Time Warner Inc. is to back Pathe’s $1.2-billion bid for MGM/UA Communications Co., despite widespread reports that the talks had broken down.

Beverly Hills-based Pathe also confirmed earlier reports that it might extend a June 23 deadline by which it was supposed to conclude its $20-a-share tender offer for MGM/UA.

Pathe shares fell 50 cents to $3.875 on the New York Stock Exchange, while MGM/UA shares dropped 37.5 cents to $18.25 amid persistent rumors that Time Warner was pulling out of a deal under which it is to provide $650 million of Pathe’s financing.

“They’re still on,” one top Warner executive said of the talks.

Another individual close to the discussions said: “We have something between a happy marriage and what you’re hearing (about a breakdown in negotiations).”

Pathe President Giancarlo Parretti has been struggling to conclude financing arrangements for the MGM/UA acquisition, which had been scheduled to close earlier this month.

In Monday’s statement, Pathe said a separate company owned by Pathe Chairman Florio Fiorini, Sasea Holding, had failed to conclude a sale of shares in Banca Agricola Milanese to Centro Nord Commissionaria, which was to have provided $52 million in financing for the deal. But Sasea and another company owned by Parretti raised the financing by selling other securities, Pathe said.