Lionsgate shares jump more than 16% after report of Legendary takeover bid
Key Facts
Lionsgate shares jumped more than 16% during trading following a report that Legendary Entertainment had submitted an offer to acquire the film and television studio, according to Investing.com, citing Bloomberg. The website said Legendary had renewed talks to buy the company, bringing a potential takeover back into focus after earlier interest in the studio. Representatives for Lionsgate, Legendary and Apollo, which backs Legendary, declined to comment, according to the same report. The stock has previously reacted to news of buyer interest, with Investing.com reporting in July that it rose as much as 10% in after-hours trading following takeover reports. The latest jump occurred during the trading session, while the earlier move reported by the website took place after the market closed.
Legendary's documented interest in buying Lionsgate dates back to the previous year, with Bloomberg reporting on it on 12 July 2025. The news agency reported at the time that preliminary talks between the parties had focused on a potential partnership to produce a slate of films. Reuters covered the process of assessing takeover offers in a report published in July, citing sources familiar with the company's actions. The sources said Lionsgate was working with an investment bank to assess incoming takeover approaches from interested parties. They added that previously interested parties had withdrawn because of price expectations, making valuation an obstacle that had already confronted talks to sell the company, according to the sources' account to Reuters.
The process follows the separation of the studio business from Starz, a transaction that included a change to Lionsgate's share structure, according to the company's filing with the U.S. Securities and Exchange Commission. Lionsgate said its previous dual-class share structure had been consolidated into a single class as part of the separation. The studio's operations include a library of more than 20,000 film and television titles, according to the company's description of its assets. The library generated revenue of $987 million in the twelve months ended 30 June 2026, according to the company's earnings release. In its 2026 proxy statement, Lionsgate said television content now accounted for nearly a third of library revenue, compared with 15% ten years earlier.
On the potential buyer's side, Legendary announced on 31 January 2022 an agreement for a $760 million equity investment from funds managed by Apollo affiliates. The announcement specified that the investment was an equity stake in Legendary and marked the investment group's affiliated funds taking a stake in the studio. Apollo said when announcing the agreement: "We see Legendary as a platform for potential additional investments." In a subsequent ownership development, Reuters reported that Legendary had bought Dalian Wanda Group's stake, with the group exiting the company. The news agency added that Legendary funded the stake purchase with cash and without external financing, describing how the studio completed the buyout of its former shareholder.
In Lionsgate's latest reported quarterly results, revenue reached $776.6 million in the first quarter of fiscal 2027, ended 30 June 2026. The company said in its earnings release filed with the U.S. Securities and Exchange Commission that revenue rose 48% from the corresponding quarter a year earlier. The release also reported the company's leverage ratio at the end of the period, alongside performance figures for its film and television business. The ratio stood at 4.3 times adjusted operating income before depreciation and amortization, according to the metric Lionsgate used in the filing. The ratio was calculated using adjusted operating income for the trailing twelve months, while the reported revenue figure covered the first fiscal quarter.
Lionsgate also announced that contracted future revenue not yet recognized for accounting purposes had risen to about $1.5 billion at the end of the quarter covered by the earnings release. Those contracts increased 21% year on year, according to the filing, which described them as contracted future revenue for the film and television business that had yet to be recognized as accounting revenue. The company's next financial milestone will be the release of its fiscal 2027 second-quarter results, according to the schedule Lionsgate set for shareholders and investors. The upcoming results cover the quarter ended 30 September 2026, the period following the quarter in which the company reported year-on-year revenue growth. Lionsgate scheduled the release for Thursday, 5 November 2026, after the market closes.