Sony & MGM: Sony Corp. (SNE) is in talks to acquire film studio Metro-Goldwyn-Mayer Inc. in a cash deal valued at around $5 billion, a source familiar with the talks said Wednesday.

News of the discussions sent MGM shares surging nearly 12 percent, or $2.10, to close at $19.75 Wednesday on the New York Stock Exchange. The stock gained another 5 cents in after hours trading.

Shares of Sony fell 28 cents to close at $41.95 on news of the deal, which was first reported Wednesday afternoon by The Wall Street Journal.

Sony would join with private equity firms Texas Pacific Group and Providence Equity Partners to buy the legendary studio, the source said.

Sony would likely fold MGM into its Sony Pictures Entertainment division. It is not known what would become of the MGM and United Artists labels.

Sony is likely interested in acquiring MGM's library of more than 4,200 titles, including the "Pink Panther" series.

Representatives from Sony Pictures, MGM and Texas Pacific Group declined to comment. A representative from Providence Equity Partners did not return a call seeking comment.

For nearly two years, MGM has been seeking to become larger either through an acquisition or merger.

The company, which is 74 percent owned by billionaire Kirk Kerkorian, made an unsuccessful bid for Universal Studios last year. Unable to strike a deal, MGM said recently it would pay a one-time special dividend of $8 per share, which would net a $1.4 billion windfall for Kerkorian.

Late Wednesday, MGM reaffirmed its plans to have its board vote as early as next week on management's recommendation to pay the dividend. Earlier reports had speculated MGM would defer the dividend in view of the Sony offer.

If the deal goes through, it will reunite MGM with the backlot it once owned and where historic films such as "Gone With the Wind" were shot. MGM sold its backlot to Sony years ago. The company is the only major studio without its own soundstages or permanent sets.

MGM has struggled with its feature film slate in recent years, producing occasional hits such as "Legally Blonde" and "Barbershop." It also produces the popular "James Bond" series of films.

It also produces television shows, including "Stargate SG1" and "She Spies," and operates cable channels