Lionsgate unveiled a deal to spin off its studio business in a $4.6 billion special purpose acquisition deal to create a separately traded public company.
The deal will see Lionsgate’s studio business, comprising Lionsgate’s TV production and Motion Picture Group divisions and an 20,000-title film and TV library, merge with blank-check firm, Screaming Eagle Acquisition Corp. led by Eli Baker.
The media business, which is mostly comprised of Starz, will remain with Lionsgate.
Meanwhile, the newly merged group, called Lionsgate Studios Corp., will be a publicly traded entity that includes a library of popular movies such as “The Hunger Games”, “John Wick” and “The Twilight Saga.”
The deal — which is expected to raise approximately $350 million to fund strategic initiatives, with $175 million already committed by several investors — will close in spring 2024.
The merger follows strategic talks by the Jon Feltheimer-led Lionsgate to spin off its studio division or the Starz channel and its streaming platform.
Top brass have long-believed that Starz, home to shows like “Outlander” and “Power,” has been weighing down Lionsgate’s stock price and that a separation of the entities would allow investors to better value both.
As part of the SPAC merger, Lionsgate will hold 87.3% of the shares in Lionsgate Studios, while Screaming Eagle shareholders and investors will hold the remaining 12.7%.
“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 Feltheimer and Vice Chair Michael Burns said in a statement about the studio’s growth prospects.
They added that Lionsgate’s $500 million deal to acquire TV studio Entertainment One from Hasbro is expected to close next week.