Lionsgate to combine studio business with SPAC as spin-off plans revealed

Lionsgate has revealed details of its long-in-the-works plan to separate its studio business from Starz, with the US-based company set to launch Lionsgate Studios via a merger with a special purpose acquisition company (SPAC) in the coming months.

Jon Feltheimer

Under the deal, Lionsgate’s studio business will combine with Screaming Eagle Acquisition Corp, a SPAC formed to merge with other businesses.

Lionsgate Studios will consist of the company’s television studio, feature film group, its 18,000-title film and TV library, talent management firm 3 Arts and Canada-headquartered producer-distributor Entertainment One (eOne).

The company said the new entity will be one of the largest publicly traded pure-play content companies in the world, with an enterprise value pegged at US$4.6bn. Key franchises and properties owned by Lionsgate include The Hunger Games, The Twilight Saga, John Wick and Ghosts.

The deal is scheduled to close in spring 2024 and remains subject to some customary closing conditions, regulatory approvals and approval of the shareholders.

The transaction is expected to raise US$350m in gross proceeds, including US$175m of private investment in public equity financing from the Screaming Eagle trust. SPAC outfit Screaming Eagle is led by CEO Eli Baker.

Proceeds will be used to facilitate strategic initiatives, including those related to eOne. Lionsgate said it remains on course to close its US$500m acquisition of eOne by the end of the calendar year.

Michael Burns

Once complete, Lionsgate Studios and cablenet and streamer Starz will be separate publicly traded entities. Starz will continue to be owned by Lionsgate. Last month, Starz cut around 10% of its workforce as part of an “organisational restructure,” with the company also exiting the UK and Australia.

“This transaction creates one of the world’s largest publicly traded pure-play content platforms with the ability to deliver significant incremental value to all of our stakeholders,” said Lionsgate CEO Jon Feltheimer and vice-chair Michael Burns in a joint statement.

“Coupled with the acquisition of the eOne platform scheduled to close next week, the expansion of our partnership with 3 Arts and the strong performance of our content slates, we’ve put together all of the pieces for a thriving standalone content company with a strong financial growth trajectory.”

Screaming Eagle CEO Eli Baker added: “We are thrilled to be part of establishing Lionsgate Studios as one of the only pure-play content companies in the public markets, which is well positioned to unlock value for both existing and new shareholders. We believe this will be seen as one of the most innovative and value-creating transactions the market has seen in some time.”