1. Sony-MGM Merger Summary

2. Reasons for increase in the stock price of Sony  Confidence among investors regarding the profitability of the merger.  Great amount of interest shown by the business partners of Sony such as Texas Pacific Group, Providence Capital Inc. and others, in financing this deal.  Established and reputed brand name having a trust of a large no. of customers.

3. Reasons for decline in the stock- price of MGM  Borrowing of a large amount for paying the dividend of $8 per share.  Open declaration of the intention to get acquired by an organization.  Not enjoying the confidence of the shareholders after the announcement of its merger prospects with Sony.

4. Potential impact on the combined capital of the merged entity  Tremendous increment in the combined capital of the merged entity.  Increase in the scope of the business and sustained long-term profitability.  Large market share, enhanced debt capacity and lowered financial costs.  Enhanced power against buyers as well as the suppliers.

5. References Pandey, I.M. (2007). Financial Management, 8th Edition. Delhi: Vikas Publishing House. Horne, J.C. (2008). Fundamentals of Financial Management, 10th Edition. Delhi: Pearson Education Limited. Wall Street skeptical of Sony as Lion tamer. (2008). Retrieved March 29, 2008, from http://www.variety.com/article/VR1117903697.ht ml?categoryid=18&cs=1.

6. Continued ….. One day left on Sony-MGM talk pact. (2005). Retrieved March 29, 2008, from http:// www.marketwatch.com/news/story/one- day-left-mgm-sonyexclusivity/story.aspx? http:// www.marketwatch.com/news/story/one- day-left-mgm-sonyexclusivity/story.aspx?