Lionsgate takes Starz stake

US studio Lionsgate is acquiring a stake in paynet Starz as part of a stock swap that sees the latter’s largest shareholder John Malone join the former’s board.

Under terms of the agreement, Lionsgate will exchange newly issued shares representing around 3.43% of its outstanding common stock for some 4.51% of Starz stock held by Malone, who remains Starz’s largest voting shareholder with a 6.1% equity interest and 32.1% of total voting rights in the company.

Billionaire media mogul Malone said the transaction “creates the potential for a number of strategic opportunities around the world” between the two companies, which have previously collaborated on dramas such as the Kelsey Grammer-starring Boss.

Lionsgate CEO Jon Feltheimer and vice chairman Michael Burns said in a joint statement that they see “tremendous value in Starz as well as the potential to explore a broad range of strategic initiatives in the future.”

Both Lionsgate and Starz have been the subject of takeover talk of late and it was reported last year that CBS and Lionsgate were interested in joining forces to acquire the cablenet, which has an estimated value of US$3.2bn.

This came after 21st Century Fox had reportedly held preliminary talks with Starz about taking a stake in the business, whose flagship net is home to original dramas such as Outlander, The White Queen and Black Sails.

Run by former HBO boss Chris Albrecht, Starz has been viewed as a potential takeover target since it was spun-off from Malone’s Liberty Global in 2013. The main channel is in about 22 million homes while sister net Encore is in 35 million.

Meanwhile, Lionsgate, behind show such as Mad Men, Orange is the New Black, Manhattan and movies including Hunger Games and The Expendables, was being courted by at least two Chinese companies towards the end of last year, including e-commerce giant Alibaba.

Lionsgate agreed a long-term library deal with Starz in 2012 for a catalogue of more than 500 movies.