Lionsgate to carve out and list studio business in $4.6bn Spac deal

Stay informed with free updates

Simply sign up to the Media myFT Digest — delivered directly to your inbox.

Lionsgate, the entertainment company behind blockbuster franchises such as the Hunger Games and Twilight, will carve out and list its studio business through a merger with a blank-cheque company in a deal that values the division at $4.6bn.

Screaming Eagle Acquisition Corporation, a special purpose acquisition company set up by veteran Hollywood executives Harry Sloan and Jeff Sagansky, will merge with Lionsgate’s studio business.

The newly created Lionsgate Studios will house the television studio and motion picture divisions of the group, which is behind franchises such as John Wick as well as Oscar-winning film La La Land. It will also include the company’s talent management and its production and distribution businesses. 

Lionsgate Studio expects to receive a total of $350mn as part of the transaction, half of which will come from the cash held in the Spac trust and the remainder from a so-called private investment in public equity. 

Streaming platform Starz will be remain under Lionsgate’s ownership.

The deal to carve out Lionsgate Studios from the already public Lionsgate is unusual for a Spac, which typically raises money on the stock market and hunts for a private business to take public. Lionsgate will continue to hold 87.3 per cent of the total shares in the newly formed company with Screaming Eagle owning the rest. 

“This transaction creates one of the world’s largest publicly traded pure-play content platforms,” Lionsgate chief executive Jon Feltheimer and vice-chair Michael Burns said in a statement on Friday. 

The trio behind Screaming Eagle, which includes chief executive Eli Baker, has had mixed success with past Spacs. They helped take public US sports-betting group DraftKings, which now trades at five times its initial valuation and is widely considered among the most successful blank-cheque company deals ever.

However, a deal to list Bill Gates-backed Ginkgo Bioworks at a $15bn valuation has backfired, with the company is currently worth a fraction of that.

The plan to spin out Lionsgate Studios comes two years after Screaming Eagle’s Sloan, the former chair of Hollywood studio MGM, joined Lionsgate’s board of directors.