The deal brings together Lionsgate's production with Starz distribution at a time when it's more important for networks like Starz to control their own content.
The two companies are also part of cable powerhouse John Malone’s financial empire. Malone has predicted that the content side of the TV business would consolidate in reaction to the consolidation on the distribution side, where he controls a piece of Charter Communications.
“This transaction unites two companies with strong brands, complementary assets and leading positions within our industry,” said Lionsgate CEO 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. Chris Albrecht and his team have built a world-class platform and programming leader, and we’re proud to marshal our resources in a deal that accelerates our growth and diversification, generates exciting new strategic content opportunities and creates significant value for our shareholders.”
“Jon, Michael and the rest of the Lionsgate team have built the first major new Hollywood studio in decades, and we’re thrilled to join with them in a transaction that multiplies the strengths of our respective businesses,” said Starz CEO Chris Albrecht. “Our similar entrepreneurial cultures and shared vision of the future will make this alliance an incredible fit that creates tremendous value for our shareholders, great content for our audiences and limitless opportunities for our newly-combined company. I am very appreciative of the work, passion and dedication of both of our companies’ employees and more enthusiastic than ever about the future of our business.”
The agreement has been approved by the boards of the two companies and will be submitted for shareholder approval.
The terms of the agreement call for each share of Lionsgate common stock being reclassified into 0.5 voting and 0.5 new non-voting shares. Holders of each Starz Series A common stock will get $18 in cash and 0.6784 of a share of Lionsgate on-voting stock. Lionsgate says that represents $32.73 in value to Starz shareholders, an 18% premium to where Starz stock traded over the past 20 days.
The Lionsgate plans to fund the cash portion of the deal with newly issued bank and bond financing.