Lions Gate to buy cable channel Starz in $4.4 billion deal

The companies announced an agreement where Lionsgate will acquire Starz in a cash-and-stock deal totaling $4.4 billion.

Each share of Lions Gate common stock will be reclassified into 0.5 voting and 0.5 newly created non-voting shares.

Lions Gate is planning to pay more than $30 per share in cash and stock for Starz, the person said, adding that a transaction has not been finalized and talks could still fall apart. Starz Series B holders will get $7.26 in cash and 0.6321 of a share of Lions Gate voting stock and 0.6321 of a share of Lions Gate non-voting stock, according to the statement.

Santa Monica, Calif.-based Lions Gate is not new to the cable business, owning stakes in the Epix and Pop channels. Closing is expected to occur by year-end. It also produces the Twilight movies through it Summit Entertainment subsidiary and distributes The Hunger Games.

Starz, long known for showing movies, has had a number of recent breakout original series, including “Outlander” and “The Girlfriend Experience”. Starz is 49 per cent owned by USA cable and media titan John Malone after it was spun out from Liberty Media as Encore Media in 1991 and rebranded.

Speculation was raised during the past year that Starz might lands in the hands of AMC Networks or even Lions Gate. It will have production interests spanning TV and film, and will also have the premium channels and the Starz Arabia SVOD service. Starz soared 11 percent to $31.25, while Lions Gate climbed 8.4 percent to $22.70.

The deal, rumored for several weeks, cements the standing of Lionsgate as a major Hollywood player and gives it broader global reach with Starz, which operates premium television channels in the United States and globally.

“This transaction unites two companies with strong brands, complementary assets and leading positions within our industry”, said Lionsgate Chief Executive Officer Jon Feltheimer and Vice Chairman Michael Burns.

In addition to this, the amalgamated company is expected to generate ample revenue and cost synergies.

PJT Partners was the lead financial adviser to Lions Gate, while J.P. Morgan, Bank of America Merrill Lynch, Deutsche Bank and Credit Suisse were its financial advisers.