Lionsgate Acquires Starz for US$4.4 bn in Cash and Stock

What: Content leader Lionsgate will acquire integrated media and entertainment company Starz for a combination of cash and stock totaling US$4.4 billion.
Why it matters: The deal creates global content powerhouse by combining premier independent content company with world-class distribution platform.  Lionsgate Films owns a 50% stake Pantelion Films, a joint venture between Lionsgate Films and Grupo Televisa, which has the goal of bringing wider theatrical distribution of movies aimed at Latino audiences.

Lionsgate, a premier next generation content leader, and Starz, a leading integrated media and entertainment company, have announced an agreement under which Lionsgate will acquire Starz for a combination of cash and stock totaling US$4.4 billion, creating a global content powerhouse positioned to capitalize on growth opportunities worldwide.

The transaction significantly increases the combined company's content creation capabilities, enhances its leadership in premium scripted programming and scales its global distribution footprint across mobile, broadband, cable and satellite platforms.  It also paves the way for a broad range of new content partnerships and accelerates the growth of Lionsgate and Starz's own OTT services.  In addition, the acquisition is expected to generate significant revenue and cost synergies.

The combined company will encompass: a 16,000-title film and television library; the largest independent television business in the world, including 87 original series on 42 U.S. networks; a feature film business that has generated over us$7 billion at the global box office over the past four years; operation of or investment in 30 channel platforms around the world, including the flagship STARZ platform reaching 24 million U.S. subscribers, the STARZ ENCORE network with over 32 million subscribers and five OTT services; and a growing presence in location-based entertainment and video games driven by the company's deep portfolio of brands and franchises.

Under the terms of the agreement, holders of each share of Starz Series A common stock will receive US$18.00 in cash as well as 0.6784 of a share of Lionsgate non-voting stock based on a fixed exchange ratio.  The offer represents a total value of US$32.73 per share to Starz shareholders, an 18% premium to Starz's 20-trading day VWAP as of the same date. Holders of each share of Starz Series B common stock will receive US$7.26 in cash and 0.6321 of a share of Lionsgate voting stock and 0.6321 of a share of Lionsgate non-voting stock.

"The combination of Lionsgate and Starz brings significant scale to our portfolio of content and distribution assets and will enable us to compete successfully in today's rapidly evolving global entertainment marketplace," said Dr. Mark H. Rachesky, Lionsgate's Chairman of the Board.  "By bringing together complementary resources, premium quality intellectual property and exceptional management, this strategic transaction positions us extremely well to unlock the underlying value of our content to create substantial lasting value for our shareholders."

"This transaction unites two companies with strong brands, complementary assets and leading positions within our industry," said Lionsgate Chief Executive Officer Jon Feltheimer and Vice Chairman Michael Burns.  "We expect the acquisition to be highly accretive, generate significant synergies and create a whole that is greater than the sum of its parts."

Greg Maffei, Chairman of Starz, said, " The combined company will be well-positioned to return more value to our shareholders and effectively compete in the global media marketplace."

The agreement has been approved by the boards of directors of Lionsgate and Starz and will be submitted to their respective shareholders for approval as well as to regulatory authorities. The proposed creation of Lionsgate non-voting stock is also subject to shareholder approval. Closing is expected to occur by year-end.

The Company intends to fund the cash portion of the deal with a combination of newly issued bank and bond financing.  Pro forma leverage, excluding synergies, is expected to be approximately 5.0x-5.5x as of December 31, 2016, with the ability to rapidly delever given the highly cash generative nature of the combined entity.

 

Join us at PORTADA Mexico!


Editorial Staff @portada_online

Portada Staff

MORE FROM PORTADA


The 5 Most Pressing Questions About Influencer Marketing Answered by Band of Insiders, Best Buy, Bimbo, and Pepsico

The 5 Most Pressing Questions About Influencer Marketing Answered by Band of Insiders, Best Buy, Bimbo, and Pepsico

During the seventh edition of the #PortadaMX summit, experts in Influencer Marketing took the stage to discuss best practices surrounding this elusive but undeniably effective tool to reach consumers. Vivian Baron, CEO and Creative Chairwoman at Band of Insiders, presented the panelists: Best Buy Mexico's E-commerce Subdirector José Camargo, Grupo Bimbo's Global Consumer Engagement Lead Giustina Trevisi, Band of Insiders' Influencer Marketing Manager Leonardo Vargas, and Pepsico/Drinkfinity's Director of Business Innovation & Marketing Yamile Elias.


Experts: Sears’ Future in Mexico Remains Bright, Implications for U.S. Hispanic Market

Experts: Sears’ Future in Mexico Remains Bright, Implications for U.S. Hispanic Market

Experts tell Portada the downfall of the storied retailer won’t affect the Sears franchise in Mexico where better merchandising and e-commerce under the management of Grupo Carso, owned by Mexican billionaire Carlos Slim, have built the franchise into a big hit with Mexican consumers. The implications for the U.S. Hispanic Market.