Lionsgate is exploring acquiring some or all of STX Entertainment after the “Hustlers” studio already was in the midst of a planned sale to Najafi Companies for $173 million, individuals with knowledge of the talks told TheWrap.
Reps for both Lionsgate and STX declined to comment.
The purchase agreement from Najafi included a 45-day “go-shop period” which allowed current STX owner Eros to solicit other proposals for 45 days, and the $173 million also included absorbing $148 million in debt. STX would pay a $4.5 million termination fee if the deal with Najafi doesn’t go through. Prior to the Najafi sale, the studio had attempted to sell off rights to its library of films to pay down its debt, and is nearing a February deadline to repay its creditors.
In a SEC filing on Friday, ErosSTX confirmed that the company had received another offer under the go-shop process that was previously outlined in the initial terms of the sale, but did not name Lionsgate as the potential buyer.
“Eros STX Global Corporation (the “Company”) has received an alternative proposal to acquire the Company’s STX Entertainment subsidiary as part of its previously disclosed go-shop process under a definitive sale agreement the Company entered into with The Najafi Companies on December 6, 2021,” the filing reads. “The Company is actively evaluating the proposal and will issue an update as and when appropriate. There can be no assurance that this process will ultimately result in a superior proposal or the sale of STX Entertainment.”
Robert Simonds’ STX Entertainment, which is behind hits such as “Greenland” and “Bad Moms,” merged with Eros as ErosSTX in 2020 following a studio record $319 million box office fueled by 2019 hits like Jennifer Lopez’s “Hustlers” and “The Upside.”
But the company also released several flops in 2019, including “UglyDolls” (which grossed just $20 million domestic) and was hit hard by the pandemic amid production delays and a lack of interest in the few films it did manage to release. ErosSTX grossed just $8.8 million from four films in 2021, with $6 million coming from the overseas gross of the true story Guantanamo Bay drama “The Mauritanian.”
Lionsgate has been suggested for years as an M&A target for years, and in November announced that it was exploring the sale of its premium cable outlet and streaming service Starz.
Variety first reported the news of the talks.