Lions Gate Entertainment Corp. on Friday said it will spin off its studio business into a a separately traded public company via a SPAC deal that is expected to generate about $350 million.
The new company, which will include Lionsgate’s television studio and motion picture group, along with what the legacy company called “one of the world’s most valuable film and television libraries,” will combine with Screaming Eagle Acquisition Corp.
Screaming Eagle is a special purpose acquisition company, or SPAC — sometimes called a “blank check company” — which is a publicly traded company formed in order to merge with an existing business. SPAC deals have been around for decades, but saw a moment of popularity in 2020 and 2021, with 861 deals raising more than $242 billion over the two years, according to Mizuho Financial Group, but the boom dried up, with just 86 deals last year and just two so far in 2023.
Lions Gate Entertainment will continue to own cable network Starz, and its content relationship with the studios business will remain unchanged, the company said.
The new company, which will be called Lionsgate Studios, is expected to be valued at $10.70 per share, or about $4.6 billion. It will be a “platform agnostic” content company holding 18,000-titles, with multiple franchise properties including films like the “Hunger Games”, “John Wick” and television shows like “The Twilight Saga,” and “Orange is the New Black.” It will also include the production-and-distribution business and talent management, the company said in a statement.
The legacy Lions Gate Entertainment will hold 87.3% of the new company’s stock, while 12.7% is made available on the Nasdaq to trade publicly.
Lions Gate said it would use the proceeds to shore up its balance sheet and “facilitate strategic initiatives,” including its purchase of the eOne film production company from toymaker Hasbro. That $375 million deal, announced in August, is expected to close by Dec.31.
eOne will become part of Lionsgate Studios, which is expected to start trading in spring 2024, subject to regulatory approval.
“This transaction creates one of the world’s largest publicly-traded pure play content platforms with the ability to deliver significant incremental value to all of our stakeholders,” said Lionsgate CEO Jon Feltheimer and Vice Chair Michael Burns in a statement. “Coupled with the acquisition of the eOne platform scheduled to close next week, the expansion of our partnership with 3 Arts and the strong performance of our content slates, we’ve put together all of the pieces for a thriving standalone content company with a strong financial growth trajectory.”
Lions Gate Entertainment shares gained 16 cents, or 1.4%, to $11.34 in morning trading. The stock has doubled since the start of the year.
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