Lions Gate, Starz Shares Soar After Merger Deal Announced

Shares of Starz and Lions Gate Entertainment Corp. soared in premarket trade Thursday, after Lions Gate announced an agreement to buy the subscription video service in a cash and stock deal valued at $4.4 billion. Under terms of the agreement, Lionsgate will exchange $18 a share and 0.6784 of its shares for each Starz Series A share outstanding, and $7.26 in cash and 0.6321 of its shares for each Starz Series B share outstanding. Based on Wednesday's closing prices, the bid represents a 14% premium to Starz Series A shares. The deal is expected to close by year end. Lions Gate said it plans to fund the cash portion of the deal with a combination of newly issued bank and bond financing. "We expect the acquisition to be highly accretive, generate significant synergies and create a whole that is greater than the sum of its parts," Lions Gate Chief Executive Jon Feltheimer and Vice Chairman Michael Burns said in a statement. Starz Series A shares ran up 15% ahead of the open, while Lions Gate's stock soared 9.1%. Bloomberg reported late Wednesday that the companies were in advanced talks to merge.