Lionsgate‘s long-gestating plan to separate the studio with Starz is lastly a go as the corporate introduced at this time that Studios — the TV studio, movement image group and movie and tv libraries — will merge with Screaming Eagle Acquisition Corp., a SPAC (particular function acquisition firm) led by Eli Baker.
The transaction units a $4.6-billion enterprise worth on Lionsgate Studios. Lionsgate will clear $350 million in proceeds from the deal to make use of for paying down debt and strategic initiatives — together with these associated to eOne.
Primarily, the separation, anticipated to shut within the spring, will create in Lionsgate Studios one of many largest world pure-play publicly-traded content material firms — and a probably enticing acquisition goal set so as to add extra gasoline to media M&A chatter. Studios’ portfolio contains franchise properties The Starvation Video games, John Wick, The Twilight Saga and Ghosts; a strong movie and tv manufacturing and distribution enterprise; a number one expertise administration and manufacturing firm; and a big movie and tv library that throws off vital money.
Lionsgate has deliberate for almost two years to separate the studio and Starz with CEO Jon Feltheimer in August anticipated the information coming within the first quarter of 2024. Market circumstances have been an element, and the thought in any case was to attend till the corporate closed its acquisition of eOne from Hasbro, which will probably be introduced subsequent week.
Circumstances are fairly good now. Simply off The Starvation Video games: The Ballad of Songbirds & Snakes, Lionsgates had a robust yr on the field workplace, the inventory’s up. Administration believes that Lionsgate’s standalone studio enterprise can garner “a valuation extra reflective of the studio enterprise’s outlook than what Lionsgate’s present consolidated valuation displays.”
The SPAC answer is fascinating. These are empty vessels that go public, elevate money and have two years to finish a merger with an precise firm. SPACS pattern out and in of vogue on Wall Avenue, however Screaming Eagle has distinguished pedigree. Its chaired by Harry Sloan, a longtime media govt and present Lionsgate board member, who has stood up a number of the earliest and most profitable SPACs in media and leisure in partnership with Jeff Sagansky and others. Saganksy is a Screaming Eagle director.
On account of the transaction, 87.3% of the whole shares of Lionsgate Studios are anticipated to proceed to be held by mum or dad Lionsgate, whereas Screaming Eagle public shareholders and founders and customary fairness financing buyers are anticipated to personal an mixture of roughly 12.7% of the mixed firm.
Lionsgate Studios doesn’t embody Starz, which is the purpose, and the platform will proceed to be wholly owned by mum or dad Lionsgate. Lionsgate believes the cut up improves “strategic optionality” for Starz in addition to for Lionsgate Studios.
Widespread shares of Lionsgate Studios will commerce individually from Lionsgate’s Class A (LGF.A) and Class B (LGF.B) frequent shares as a single class of inventory beneath a unique inventory image not introduced at this time Sooner or later there will probably be a distribution of shares of the brand new studio inventory to Lionsgate shareholders.
The deal is topic to some closing circumstances together with regulatory approvals and approval from the shareholders and public warrant holders of Screaming Eagle.
“This transaction creates one of many world’s largest publicly-traded pure play content material platforms with the flexibility to ship vital incremental worth to all of our stakeholders,” mentioned mentioned Feltheimer and Lionsgate Vice Chair Michael Burns.
“Coupled with the acquisition of the eOne platform scheduled to shut subsequent week, the growth of our partnership with 3 Arts and the sturdy efficiency of our content material slates, we’ve put collectively all the items for a thriving standalone content material firm with a robust monetary development trajectory.”
“We’re thrilled to be a part of establishing Lionsgate Studios as one of many solely pure play content material firms within the public markets, which is effectively positioned to unlock worth for each current and new shareholders,” mentioned Screaming Eagle CEO Eli Baker. “We consider this will probably be seen as some of the progressive and worth creating transactions the market has seen in a while.”
Lionsgate’s administration mentioned it believes the transaction with Screaming Eagle supplies a extra favorable construction in comparison with potential alternate options for quite a lot of causes together with “better worth discovery and confidence,” and decrease share dilution than conventional SPAC transactions.
