Itâs official. Lionsgate has acquired Summit Entertainment for a combination of cash and stock valued at $412.5 million. This acquisition effectively turns Lionsgate into a teen super studio, as they now hold the rights to the insanely successful Twilight franchise as well as The Hunger Games. While The Hunger Games has yet to be released in theaters, the book seriesâ rabid fanbase all but ensures that the futuristic adventure pic will be a hit (a screenwriter is already hard at work on the sequel adaptation). Still, Lionsgate is crossing its fingers that the franchise takes off like a rocket. Summit will remain a standalone label for now, but thereâs no word on what the future holds. Hit the jump to read the press release.Hereâs the full press release:
SANTA MONICA, Calif. and VANCOUVER, British Columbia, Jan. 13, 2012 â Lionsgate (âthe Companyâ) and Summit Entertainment today announced that Lionsgate has completed a transaction to acquire Summit for a combination of cash and stock valued at $412.5 million.
The transaction unites two leading studios with powerful brands and complementary assets, solidifying Lionsgateâs position as the worldâs largest and most diversified independent entertainment company. By acquiring Summit, Lionsgate enhances its feature film and home entertainment offerings and further broadens its 13,000 title filmed entertainment library to include such titles as The Twilight Saga, The Hurt Locker and Red. The integration of both Summitâs domestic and international theatrical film operations will significantly enhance Lionsgateâs production and distribution capacity, while also extending the
Companyâs worldwide reach and creating a dominant international sales organization.
The transaction brings together Summitâs Twilight Saga feature film franchise, which has already grossed more than $2.5 billion at the worldwide box office, and Lionsgateâs highly anticipated Hunger Games franchise, which opens on March 23, 2012. Lionsgate will also continue to benefit from its premier television
production and distribution business, its array of branded film and television properties, its suite of branded channels and its success as an innovator in creating and distributing content for digital platforms. Both the Lionsgate and Summit labels are expected to continue and be active in the production and
distribution of films, although the combined company expects to realize significant synergies through the consolidation of administrative and other costs.
âThis transaction continues Lionsgateâs long-term growth strategy of building a diversified worldwide media company through a combination of disciplined,
accretive strategic acquisitions and organic growth while maintaining a solid balance sheet,â said Lionsgate Co-Chairman and Chief Executive Officer Jon
Feltheimer and Vice Chairman Michael Burns. âWe are uniting two powerful entertainment brands, bringing together two world-class feature film franchises
to establish a commanding position in the young adult market, strengthening our global distribution infrastructure and creating a scalable platform that will
result in significant and accretive financial benefits to Lionsgate shareholders. Rob Friedman and Patrick Wachsberger have built a remarkable organization, and weâre pleased to welcome Summitâs talented team to the Lionsgate family. Lionsgateâs growth has been built over the years in part by the successful acquisition and integration of companies like Trimark, Artisan, Redbus, Debmar-Mercury, Mandate and TV Guide Network and, in each case, Lionsgate has emerged stronger and the Companyâs brand has become more resonant.â
âJon Feltheimer, Michael Burns and the rest of the Lionsgate team have built an exciting and entrepreneurial content leader over the past 12 years, and weâre
delighted to join together these two great companies,â said Summit Entertainmentâs Co-Chairmen Rob Friedman and Patrick Wachsberger. âWe believe that the combined entity will be even greater than the sum of its parts and our dramatically enlarged media platform will create tremendous opportunities for all of us within the Summit and Lionsgate families. We want to thank our employees, whose hard work and creativity have led to the successful evolution of Summit into a leading worldwide studio, and the combination of Lionsgate and Summit will be the next chapter in creating a true global media powerhouse.â
âAs demonstrated by this acquisition, Lionsgate remains focused on preserving a strong balance sheet while pursuing its long-term growth strategy,â said Dr. Mark H. Rachesky, Co-Chairman of the Lionsgate Board of Directors. âWe are big believers in the increasing value of content and this transaction strengthens Lionsgateâs asset base while providing significant financial benefits, including highly visible cash flow and revenue. We are looking forward to realizing the
value of a Lionsgate-Summit combination for all Lionsgate shareholders.â
The majority of the purchase price was funded with cash on the balance sheet at Summit. The remainder was funded with $55 million of existing Lionsgate cash, $45 million of cash received from a newly issued series of Lionsgate convertible notes, $50 million of Lionsgate common stock and an additional $20 million of cash or stock to be issued at Lionsgateâs option within 60 days. At closing, Summitâs existing term loan was refinanced with a $500 million debt facility, secured by the collateral of the Summit assets. Although the term loan matures in 2016, the Company anticipates repaying the loan well before the maturity date, due to the significant cash flow the business is expected to generate. In addition, this expected cash flow will facilitate the Companyâs financial
objective of further deleveraging Lionsgateâs balance sheet. The transaction is expected to be significantly accretive in Lionsgateâs 2013 fiscal year beginning
April 1, 2012.
JP Morgan, Barclays Capital, and Jefferies served as joint lead arrangers and joint bookrunners on financing the acquisition for Lionsgate. JP Morgan, Barclays
Capital, and Jefferies also served as financial advisors to the Company. Barclays Capital provided a fairness opinion to Lionsgate. Wachtell, Lipton, Rosen & Katz served as outside legal counsel for Lionsgate. Liner Grode Stein LLP and Skadden, Arps, Slate, Meagher & Flom LLP served as outside legal counsel for Summit.