Lionsgate Studios Spinoff Plan Set: Deal Values Business at .6 Billion and Will Raise 0 Million

Lionsgate Studios Spinoff Plan Set: Deal Values Business at $4.6 Billion and Will Raise $350 Million

Movies, News

Lionsgate unveiled details of the long-awaited separation of its studios business and the Starz TV and streaming division.

The company announced Friday that its studio business, comprising its TV and film segments and a content library with 18,000-plus titles, will spin off in a merger with Screaming Eagle Acquisition Corp., a special-purpose acquisition company. The deal is expected to close in spring 2024.

The new entity, Lionsgate Studios Corp., will let investors value the film and TV businesses as a publicly traded, pure-play standalone company. The transaction is expected to raise approximately $350 million to fund strategic initiatives, with $175 million already committed by several blue-chip investors.

The deal gives Lionsgate Studios at an enterprise value of $4.6 billion and is a big step along the path toward the full separation of Starz and the studios group. The Lionsgate parent company is expected to continue to own 87.3% of the total shares of Lionsgate Studios, while Screaming Eagle’s founders, public shareholders and investors are expected to own an aggregate of 12.7% of the combined company. The company said the deal to form Lionsgate Studios is expected to close in the spring of 2024, subject to closing conditions including regulatory approvals and approval from the shareholders and warrant holders of Screaming Eagle.

“This transaction creates one of the world’s largest independent pure-play content platforms with the ability to deliver significant incremental value to all of our stakeholders,” 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.”

Common shares of Lionsgate Studios will trade separately from Lionsgate’s Class A and Class B common shares. Lionsgate Studios does not include the Starz platform, which will continue to be wholly owned by the Lionsgate parent company.

The plans to form Lionsgate Studios comes as the company is ending the year on a high note, with its films generating over $1 billion at the worldwide box office including “John Wick: Chapter 4,” Hunger Games prequel “The Ballad of Songbirds and Snakes” and “Saw X.”

In addition to establishing Lionsgate Studios as a standalone publicly traded entity, the transaction is expected to deliver approximately $350 million of gross proceeds to Lionsgate, including $175 million in private investment in public equity (PIPE) financing already committed by leading mutual funds and other investors. The company said the net proceeds from the transaction will be used to facilitate strategic initiatives including the eOne acquisition.

Lionsgate is going the SPAC route in merging with Screaming Eagle, which is a publicly traded entity formed with the purpose of raising capital and merge with existing businesses. SPACs let companies raise financing and go public, without having to go through the more time-consuming traditional IPO route.

As part of the transaction, Lionsgate Studios has made it a condition to receive no more than $175 million of gross trust proceeds related to tax and other considerations. Also under the deal, all of Screaming Eagle’s private warrants have been eliminated for no consideration, while its public warrants will be repurchased for 50 cents apiece.

“We are thrilled to be part of establishing Lionsgate Studios as the only pure-play content company in the public markets, well positioned to unlock value for both existing and new shareholders,” Screaming Eagle CEO Eli Baker said in a statement. “We believe this will be seen as one of the most innovative and value-creating transactions the market has seen in some time.”

Lionsgate is expected to maintain its current corporate debt structure in the transaction. Morgan Stanley is acting as financial advisor to Lionsgate while Citigroup Global Markets is advising Screaming Eagle. Citigroup and Morgan Stanley are acting as joint placement agents with respect to the common equity financing.


Leave a Reply