Deal Creates Global Content Powerhouse by Combining Premier
Independent Content Company with World-Class Distribution
Platform
SANTA MONICA, Calif. and
ENGLEWOOD, Colo., June 30, 2016 /PRNewswire/ -- Lionsgate
(NYSE: LGF), a premier next generation content leader, and Starz
(NASDAQ: STRZA, STRZB), a leading integrated media and
entertainment company, today announced an agreement under which
Lionsgate will acquire Starz for a combination of cash and stock
totaling $4.4 billion, creating a
global content powerhouse positioned to capitalize on growth
opportunities worldwide.
![Courtesy of Lionsgate. (PRNewsFoto/Lionsgate) Courtesy of Lionsgate. (PRNewsFoto/Lionsgate)](https://photos.prnewswire.com/prnvar/20130919/LA83194LOGO)
![Courtesy of Starz Courtesy of Starz](https://photos.prnewswire.com/prnvar/20160630/385219LOGO)
Under the terms of the agreement, each share of Lionsgate common
stock will be reclassified into 0.5 voting and 0.5 newly created
non-voting shares. Holders of each share of Starz Series A
common stock will receive $18.00 in
cash as well as 0.6784 of a share of Lionsgate non-voting stock
based on a fixed exchange ratio. Based on Lionsgate's
20-trading day volume weighted average price ("VWAP"), as of
June 28, 2016, the offer represents a
total value of $32.73 per share to
Starz shareholders, an 18% premium to Starz's 20-trading day VWAP
as of the same date. Holders of each share of Starz Series B common
stock will receive $7.26 in cash and
0.6321 of a share of Lionsgate voting stock and 0.6321 of a share
of Lionsgate non-voting stock.
The transaction significantly increases the combined company's
content creation capabilities, enhances its leadership in premium
scripted programming and scales its global distribution footprint
across mobile, broadband, cable and satellite platforms. It
also paves the way for a broad range of new content partnerships
and accelerates the growth of Lionsgate and Starz's own OTT
services. In addition, the acquisition is expected to
generate significant revenue and cost synergies.
To illustrate the scale of the transaction, the combined company
will encompass: a 16,000-title film and television library; the
largest independent television business in the world, including 87
original series on 42 U.S. networks; a feature film business that
has generated over $7 billion at the
global box office over the past four years; operation of or
investment in 30 channel platforms around the world, including the
flagship STARZ platform reaching 24 million U.S. subscribers, the
STARZ ENCORE network with over 32 million subscribers and five OTT
services; and a growing presence in location-based entertainment
and video games driven by the company's deep portfolio of brands
and franchises.
"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 Dr. Mark
H. Rachesky, Lionsgate's Chairman of the Board. "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."
"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. "We expect the acquisition to be highly
accretive, generate significant synergies and create a whole that
is greater than the sum of its parts. Chris Albrecht and his team have built a
world-class platform and programming leader, and we're proud to
marshal our resources in a deal that accelerates our growth and
diversification, generates exciting new strategic content
opportunities and creates significant value for our
shareholders."
Greg Maffei, Chairman of Starz,
said, "Chris Albrecht and his team
have grown Starz into an industry leader that provides highly-rated
and diverse content, drawing critical claim and brand recognition
for Starz. Together, Lionsgate and Starz form an entertainment
powerhouse with a world-renowned studio that produces blockbuster
movies and channels with must-have programming that will be able to
capitalize on content opportunities across multiple
platforms. The combined company will be well-positioned to
return more value to our shareholders and effectively compete in
the global media marketplace."
"Jon, Michael and the rest of the Lionsgate team have built the
first major new Hollywood studio
in decades, and we're thrilled to join with them in a transaction
that multiplies the strengths of our respective businesses," said
Starz Chief Executive Officer Chris
Albrecht. "Our similar entrepreneurial cultures and
shared vision of the future will make this alliance an incredible
fit that creates tremendous value for our shareholders, great
content for our audiences and limitless opportunities for our
newly-combined company. I am very appreciative of the work,
passion and dedication of both of our companies' employees and more
enthusiastic than ever about the future of our business."
The agreement has been approved by the boards of directors of
Lionsgate and Starz and will be submitted to their respective
shareholders for approval as well as to regulatory authorities. The
proposed creation of Lionsgate non-voting stock is also subject to
shareholder approval. Closing is expected to occur by year-end.
The Company intends to fund the cash portion of the deal with a
combination of newly issued bank and bond financing. Pro
forma leverage, excluding synergies, is expected to be
approximately 5.0x-5.5x as of December 31,
2016, with the ability to rapidly delever given the highly
cash generative nature of the combined entity.
LionTree Advisors is serving as exclusive financial advisor and
Baker Botts LLP is serving as legal advisor to Starz.
LionTree Advisors provided a fairness opinion to the board of
directors of Starz. The Raine Group is serving as financial
advisor and Weil, Gotshal & Manges LLP is serving as legal
advisor to the Special Committee of Starz's board of directors. The
Raine Group also provided a fairness opinion to the Special
Committee of Starz's board of directors.
PJT Partners is serving as lead financial advisor to Lionsgate.
Additionally, J.P. Morgan, Bank of America Merrill Lynch, Deutsche
Bank and Credit Suisse are serving as financial advisors to
Lionsgate. Wachtell, Lipton, Rosen & Katz and Dentons are
serving as legal advisors to Lionsgate. Financing was provided by
J.P. Morgan, Bank of America Merrill Lynch and Deutsche Bank.
PJT Partners also provided a fairness opinion to the board of
directors of Lionsgate and advised on arranging the transaction
financing.
Lionsgate and Starz will hold a conference call at 9:00 A.M. ET/6:00 A.M.
PT today, June 30. Interested parties may participate
live in the conference call by calling (800) 230-1074 (612-332-0226
outside the U.S. and Canada). A full digital replay will be
available from today, June 30,
through July 6, by dialing (800)
475-6701 (320- 365-3844 outside the U.S. and Canada) and using access code 397261.
ABOUT LIONSGATE
Lionsgate is a premier next generation global content leader
with a diversified presence in motion picture production and
distribution, television programming and syndication, home
entertainment, international distribution and sales, branded
channel platforms, interactive ventures and games, and
location-based entertainment. The Company has nearly 80
television shows on 40 different networks spanning its primetime
production, distribution and syndication businesses. These include
the critically-acclaimed hit series Orange is the New Black,
the beloved drama series Nashville, the syndication successes
The Wendy Williams Show and Celebrity Name Game (with
FremantleMedia), the breakout series The Royals and the
Golden Globe-nominated dramedy Casual.
The Company's feature film business spans eight labels and
includes the blockbuster Hunger Games franchise,
the Now You See Me, Divergent and John Wick
series, Sicario, The Age of Adaline,
Roadside Attractions' Love &
Mercy and Mr. Holmes, Codeblack Films'
Addicted and breakout concert film Kevin Hart: Let Me Explain and Pantelion
Films' Instructions Not Included, the highest-grossing
Spanish-language film ever released in the U.S.
Lionsgate's home entertainment business is an industry leader in
box office-to-DVD and box office-to-VOD revenue conversion rates.
Lionsgate handles a prestigious and prolific library of
approximately 16,000 motion picture and television titles that is
an important source of recurring revenue and serves as a foundation
for the growth of the Company's core businesses. The Lionsgate and
Summit brands remain synonymous with original, daring, quality
entertainment in markets around the
world. www.lionsgate.com
ABOUT STARZ
Starz (NASDAQ: STRZA, STRZB) is a leading integrated global
media and entertainment company with operating units that provide
premium subscription video programming on domestic U.S. pay
television networks (Starz Networks) and global content
distribution (Starz Distribution), www.starz.com. The Starz
Networks operating unit is home to the flagship STARZĀ® brand with
24.0 million subscribers in the United
States as of March 31, 2016,
with the STARZ ENCORESM network at 32.4 million subscribers.
Through STARZ, the company provides high quality, entertaining
premium subscription video programming with 17 premium pay TV
channels and associated on-demand and online services. STARZ is
sold through U.S. multichannel video distributors, including cable
operators, satellite television providers, telecommunications
companies, and other online and digital platforms. Starz offers
subscribers more than 5,000 distinct premium television episodes
and feature films every year and up to 1,500 every month, including
STARZ Original series, first-run movies and other popular movie and
television programming. The Starz Distribution operating unit is
home to the Anchor Bay Entertainment, Starz Digital, and Starz
Worldwide Distribution divisions. In addition to STARZ Original
series, Starz Distribution develops, produces and acquires movies,
television and other entertainment content for worldwide home
video, digital, and television licensing and sales.
For further information, please contact:
Peter
Wilkes
|
Theano
Apostolou
|
Lionsgate
|
Starz
|
(310)
255-3726
|
(424)
204-4052
|
pwilkes@lionsgate.com
|
theano@starz.com
|
|
|
For investor
inquiries:
|
|
James
Marsh
|
Courtnee
Chun
|
Lionsgate
|
Starz
|
(310)
255-3651
|
(720)
875-5420
|
jmarsh@lionsgate.com
|
courtnee.chun@starz.com
|
Caution regarding Forward-Looking Statements
This communication may contain certain forward-looking
statements, including certain plans, expectations, goals,
projections, and statements about the benefits of the proposed
transaction, the merger parties' plans, objectives, expectations
and intentions, the expected timing of completion of the
transaction, and other statements that are not historical facts.
Such statements are subject to numerous assumptions, risks, and
uncertainties. Statements that do not describe historical or
current facts, including statements about beliefs and expectations,
are forward-looking statements. Forward-looking statements may be
identified by words such as expect, anticipate, believe, intend,
estimate, plan, target, goal, or similar expressions, or future or
conditional verbs such as will, may, might, should, would, could,
or similar variations. The forward-looking statements are intended
to be subject to the safe harbor provided by Section 27A of the
Securities Act of 1933, Section 21E of the Securities Exchange Act
of 1934, and the Private Securities Litigation Reform Act of
1995.
While there is no assurance that any list of risks and
uncertainties or risk factors is complete, below are certain
factors which could cause actual results to differ materially from
those contained or implied in the forward-looking statements
including: the substantial investment of capital required to
produce and market films and television series; increased costs for
producing and marketing feature films and television series; budget
overruns, limitations imposed by Lionsgate's or Starz's credit
facilities and notes; unpredictability of the commercial success of
Lionsgate's or Starz's motion pictures and television programming;
risks related to Lionsgate's or Starz's acquisition and integration
of acquired businesses; the effects of dispositions of businesses
or assets, including individual films or libraries; the cost of
defending Lionsgate's or Starz's intellectual property;
technological changes and other trends affecting the entertainment
industry; the possibility that the proposed transaction does not
close when expected or at all because required regulatory,
shareholder or other approvals are not received or other conditions
to the closing are not satisfied on a timely basis or at all; the
risk that the financing required to fund the transaction is not
obtained; potential adverse reactions or changes to business or
employee relationships, including those resulting from the
announcement or completion of the transaction; uncertainties as to
the timing of the transaction; competitive responses to the
transaction; the possibility that the anticipated benefits of the
transaction are not realized when expected or at all, including as
a result of the impact of, or problems arising from, the
integration of the two companies; the possibility that the
transaction may be more expensive to complete than anticipated,
including as a result of unexpected factors or events; diversion of
management's attention from ongoing business operations and
opportunities; potential adverse reactions or changes to business
or employee relationships, including those resulting from the
announcement or completion of the transaction; Lionsgate's ability
to complete the acquisition and integration of Starz successfully;
litigation relating to the transaction; and other factors that may
affect future results of Lionsgate and Starz. Additional factors
that could cause results to differ materially from those described
above can be found in Lionsgate's Annual Report on Form 10-K for
the year ended March 31, 2016, on
file with the Securities and Exchange Commission (the "SEC") and
available in the "Corporate" section of Lionsgate's website,
http://www.lionsgate.com, under the heading "Reports" and in other
documents Lionsgate files with the SEC, and in Starz's Annual
Report on Form 10-K for the year ended December 31, 2015 and in its subsequent Quarterly
Reports on Form 10-Q, including for the quarter ended March 31, 2016, each of which is on file with the
SEC and available in the "Starz Corporate" section of Starz's
website, http://www.Starz.com, under the subsection "Investor
Relations" and then under the heading "SEC Filings" and in other
documents Starz files with the SEC.
All forward-looking statements speak only as of the date they
are made and are based on information available at that time.
Neither Lionsgate nor Starz assumes any obligation to update
forward-looking statements to reflect circumstances or events that
occur after the date the forward-looking statements were made or to
reflect the occurrence of unanticipated events except as required
by federal securities laws. As forward-looking statements involve
significant risks and uncertainties, caution should be exercised
against placing undue reliance on such statements.
Important Additional Information
In connection with the proposed transaction, Lionsgate will file
with the SEC a Registration Statement on Form S-4 that will
include a Joint Proxy Statement of Lionsgate and Starz and a
Prospectus of Lionsgate, as well as other relevant documents
concerning the proposed transaction. The proposed transaction
involving Lionsgate and Starz will be submitted to Starz's
stockholders and Lionsgate's stockholders for their consideration.
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval. STOCKHOLDERS OF LIONSGATE AND STOCKHOLDERS OF
STARZ ARE URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT
PROXY STATEMENT/PROSPECTUS REGARDING THE TRANSACTION WHEN IT
BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE
SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS,
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Stockholders
will be able to obtain a free copy of the definitive joint proxy
statement/prospectus, as well as other filings containing
information about Lionsgate and Starz, without charge, at the SEC's
website (http://www.sec.gov). Copies of the joint proxy
statement/prospectus and the filings with the SEC that will be
incorporated by reference in the joint proxy statement/prospectus
can also be obtained, without charge, by directing a request to
James Marsh, Senior Vice President
of Lionsgate Investor Relations, 2700 Colorado Avenue, Santa Monica, California, 90404, or at (310)
255-3651, or to Starz, 8900 Liberty Circle, Englewood, Colorado 80112, or at
1-855-807-2929.
Participants in the Solicitation
Lionsgate, Starz, and certain of their respective directors,
executive officers, and employees may be deemed to be participants
in the solicitation of proxies in respect of the proposed
transaction. Information regarding Lionsgate's directors and
executive officers is available in its definitive proxy statement,
which was filed with the SEC on July 29,
2015, and certain of its Current Reports on
Form 8-K. Information regarding Starz's directors and
executive officers is available in its definitive proxy statement,
which was filed with SEC on April 29,
2016, and certain of its Current Reports on
Form 8-K. Other information regarding the participants
in the proxy solicitation and a description of their direct and
indirect interests, by security holdings or otherwise, will be
contained in the joint proxy statement/prospectus and other
relevant materials filed with the SEC. Free copies of this
document may be obtained as described in the preceding
paragraph.
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SOURCE Lionsgate