Movie studio Lionsgate, the home of smash hits The Hunger Games and Twilight franchises, has agreed to a deal for US premium cable channel Starz for $4.4bn (£3.3bn).
The stock and cash deal will value Starz at a 15 per cent premium to the company’s closing price on Wednesday. Starz is 49 per cent owned by US cable and media titan John Malone after it was spun out from Liberty Media as Encore Media in 1991 and rebranded.
Lionsgate expects the acquisition to be “highly accretive” to earnings and generate cost synergies.
“The combination of Lionsgate and Starz brings significant scale to our portfolio of content and distribution assets and will enable us to compete successfully in today’s rapidly evolving global entertainment marketplace,” said Lionsgate’s chairman Mark Rachesky in a statement.
“By bringing together complementary resources, premium quality intellectual property and exceptional management, this strategic transaction positions us extremely well to unlock the underlying value of our content to create substantial lasting value for our shareholders.”
The combined company will be the largest independent television business in the world, boasting a 16,000-title film and television library and 87 original series on 42 US networks.
Lionsgate’s feature film business has generated over $7bn at the global box office over the past four years
Each share of Lionsgate common stock will be reclassified into 0.5 voting and 0.5 newly created non-voting shares under the terms of the agreement. Holders of each share of Starz series A common stock will receive $18 in cash as well as 0.678 of a share of Lionsgate non-voting stock based on a fixed exchange ratio.