Lionsgate Studios separates from Starz in SPAC deal

Lionsgate’s longtime plan to separate the studio from Starz is finally becoming a reality, as the company announced today that it is merging studios — its TV studio, its film group and its film and television libraries — with Screaming Eagle Acquisition Corp., A SPAC (Special Purpose), will merge into an acquisition company led by Eli Baker.

The separation is expected to be completed this spring, making Lionsgate Studios one of the largest pure-play, publicly traded content companies in the world. The hope is that an attractive takeover target will give further impetus to the media chatter about mergers and acquisitions that is already in full swing. The studios’ portfolio includes franchise properties The Hunger Games, John Wick, The Twilight Saga And Ghosts; a robust film and television production and distribution company; a leading talent management and production company; and a large film and television library that generates a lot of money.

Lionsgate has been planning to separate the studio from Starz for almost two years. CEO Jon Feltheimer said last August that they would wait until the company completes its acquisition of eOne from Hasbro, which will be announced next week.

SPACs have come and gone on Wall Street, but Screaming Eagle has a distinctive pedigree. The chairman is longtime media executive and current Lionsgate board member Harry Sloan, who along with Jeff Sagansky and others founded some of the first and most successful SPACs in the media and entertainment space. Saganksy is a Screaming Eagle director.

As a result of the transaction, 87.3% of Lionsgate Studios’ total shares are expected to remain owned by Lionsgate, while Screaming Eagle’s public shareholders and founders and common stock investors are expected to hold approximately 12.7% of the shares in total. possess. combined company. The deal values ​​Lionsgate Studios at an enterprise value of approximately $4.6 billion. Lionsgate Studios does not own the STARZ platform, which is wholly owned by Lionsgate.

In addition to establishing Lionsgate Studios as a standalone publicly traded company, the transaction is expected to provide Lionsgate with gross proceeds of approximately $350 million, including $175 million in private investment in public equity financing (PIPE) already committed by leading investment funds and other investors. became .

The net proceeds from the transaction are expected to be used to improve Lionsgate’s balance sheet and facilitate strategic initiatives, including those related to the eOne business.

Lionsgate Studios common stock will trade separately from Lionsgate’s Class A (LGF.A) and Class B (LGF.B) common stock as a single class of stock.

The transaction is subject to certain closing conditions, including regulatory approval and the approval of Screaming Eagle shareholders and public warrant holders.

“This transaction creates one of the world’s largest publicly traded pure-play content platforms with the ability to deliver significant value to all of our stakeholders,” said Michael Burns, vice chairman of Feltheimer and Lionsgate. “Combined with the acquisition of the eOne platform, which closes next week, the expansion of our partnership with 3 Arts and the strong performance of our content offerings, we have all the ingredients in place for a thriving independent content company with a strong financial growth trajectory.”

“We are pleased to be part of establishing Lionsgate Studios as one of the few pure-play content companies in the public markets that is well positioned to create value for both existing and new shareholders,” said Eli Baker, CEO of Screaming Eagle. “We believe this will be one of the most innovative and value-added transactions the market has seen in a long time.”