Dec 22, 2023 - Business

Lionsgate to spin out studio in $4.6B SPAC deal

Photo: Smith Collection/Gado/Getty Images

Lionsgate will spin out its studio business into a separately traded company via a SPAC deal with Screaming Eagle Acquisition Corp., the company announced Friday.

Why it matters: Lionsgate has long believed that Starz was weighing down its stock price and that a separation would allow investors to better value both.

Details: The studio business, which is made up of Lionsgate's TV production and motion picture group divisions and an 18,000-title library, will be combined with Screaming Eagle — led by SPAC veteran Eli Baker — to form Lionsgate Studios.

  • The transaction values Lionsgate Studios at an enterprise value of approximately $4.6 billion.
  • The deal includes roughly $350 million of gross proceeds to Lionsgate, including $175 million in PIPE (private investment in public equity) financing already committed by leading mutual funds and other investors.
  • Lionsgate will hold 87.3% of the shares in Lionsgate Studios, while Screaming Eagle shareholders and investors will hold the remaining 12.7%.
  • The deal is expected to close next spring.
  • The media business, which is mostly comprised of Starz, will remain with Lionsgate.

The big picture: Lionsgate has been planning to split its studio business from its streaming service Starz for more than two years.

  • At the same time, separating Lionsgate studio into a separately traded company could make it more attractive to a buyer.
  • In August, Lionsgate agreed to buy film and TV studio Entertainment One from Hasbro for around $500 million. That deal is expected to close next week, Lionsgate CEO Jon Feltheimer said Friday.
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