Lion’s Gate Studio Business Spin-Off Notes

Under the terms of the agreement, the enterprise value of the new company will be $4.6BN and $350MM of gross proceeds will be delivered to Lionsgate including $175MM in PIPE financing already committed. Lionsgate Studios will own 87.3% of the new company. The transaction is expected to close in the spring of 2024.

The transaction looks interesting, and I’m going to spend more time digging into the implied valuation. One concern is that Lionsgate will own 87.3% of the new company, but as far as I can see, the new company will not be spun off to shareholders. This could prevent the transaction from unlocking much value.

Lionsgate Spin-off Transcript

On February 9, 2023, during its earnings call, management announced that it plans to separate Lions Gate and STARZ by September 2023. The CEO said the following on the call: “In closing, our plan to separate Lionsgate and STARZ by the end of September remains on track. Separation will give our 2 core businesses the opportunity to pursue strategic and financial paths that make sense for each of them and unlock greater value by operating as pure-play entities. We’re exploring a number of financial strategies to leave both companies with strong balance sheets at the time of separation. With our film and television studio businesses operating at full throttle and STARZ establishing itself in the streaming ecosystem as a complementary bundling partner of choice operating on a stand-alone basis will give both companies a chance to shine.”