Despite currently being down more than 5%, Lionsgate Entertainment (LFG.A) (LFG.B) shares edged higher at the start of Friday's session after it was announced that the Studio Business of Lionsgate will merge with Screaming Eagle Acquisition Corp. (SCRM).
The deal values the business, which comprises its Television Studio and Motion Picture Group segments and valuable film and television libraries, at approximately $4.6 billion.
The move is part of Lionsgate's plan to separate its studio unit from the Starz cable and streaming division. It is expected to raise approximately $350 million of total gross proceeds for Lionsgate, including $175 million in PIPE financing already committed by leading mutual funds and other investors.
The deal will result in 87.3% of the total shares of Lionsgate Studios held by Lionsgate, with Screaming Eagle public shareholders and founders expected to own approximately 12.7% of the combined company. The deal is expected to close in the spring of 2024.
"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.