Film studio Metro-Goldwyn-Mayer Inc. (MGM) on Tuesday abruptly withdrew from the auction for Vivendi Universal's (V) U.S. media assets, saying the price was too high, and narrowing the field of bidders to four.

Separately, MGM's controlling shareholder, billionaire Kirk Kerkorian (search) and his investment company Tracinda Corp., unveiled a joint $240 million tender offer for MGM shares at a 25 percent premium to their Tuesday closing price. The offer to acquire 15 million shares was at $16 per share.

MGM Chief Executive Alex Yemenidjian said in a statement Vivendi's entertainment assets "are attractive," but added that the "current price expectation would not be consistent with our valuation of the assets." MGM had offered $11.5 billion.

MGM shares jumped to $14.75 on Instinet from $12.84 at the close, while Vivendi shares slipped to $18 from $18.51.

Financial analyst David Miller of Sanders Morris Harris called the moves a plus for MGM shareholders because while a possible merger with Vivendi's U.S. movie and TV groups offered MGM a good strategic fit, the tender offer should boost the near-term stock price given the premium Kerkorian and Tracinda are offering.

"This is a positive for anyone who (owns) MGM" shares, he said.

MGM had recently sweetened its offer for Vivendi Universal Entertainment (VUE), the division that houses Universal Pictures, the USA and Sci Fi cable TV channels and Universal theme parks, to $11.5 billion from a previous $11.2 billion.

Recent reports put the price as high as $14 billion.

One source familiar with the bidding told Reuters on Sunday that any figure in the $11 billion range was too low. The source said Vivendi officials were in Los Angeles this week to discuss the bids with the goal of picking a final bidder by mid-August

An MGM spokesman was not immediately available to comment.

MGM's withdrawal leaves only two groups with formal offers for VUE. One is cable TV magnate John Malone's Liberty Media Corp. and the second is an investor group led by Edgar Bronfman, Jr.

Also in the bidding mix are General Electric Co.'s (GE) NBC television network and media giant Viacom Inc. (VIA)

Sources who knew of the bidding said last week that cable TV company Comcast Corp. was also looking at VUE.