Lionsgate Shares Jump More Than 16% After Report of Legendary Takeover Bid
Key Facts
Lionsgate shares jumped more than 16% in trading on October 20 following a report that Legendary Entertainment had made an offer to acquire Lionsgate Studios, according to the EL7 news item linked to the development. Investing cited Bloomberg as reporting that Legendary had submitted the offer to buy the studio that owns the film and television library. Representatives for Legendary, Lionsgate and Apollo declined to comment on the report, according to the website carrying the takeover news. The report highlighted Lionsgate's theatrical distribution network, noting that completing the acquisition would give Legendary its own network for releasing films in cinemas. It also identified Lionsgate's library among the targeted assets, including "The Hunger Games" and "John Wick" franchises, which it highlighted in its coverage of the potential deal.
Lionsgate's library comprises more than 20,000 film and television titles, according to the official description of the company's business on its investor relations website. The library spans films and television programmes within the studio business that is the subject of the takeover offer reported by Bloomberg. Legendary is the studio behind the "Dune" franchise, according to an earlier Bloomberg report on the company's interest in Lionsgate Studios. Its productions also include "A Minecraft Movie", which the same report cited among the works associated with the studio seeking to buy Lionsgate. The relationship between the companies began with preliminary talks focused on a potential partnership to produce a slate of films, according to Bloomberg via the Bloomberg Law website.
Legendary and Lionsgate have held intermittent discussions about a potential deal between the companies, according to people familiar with the matter cited in the latest report. The takeover interest comes as Lionsgate has faced pressure from activist investor Anson Funds over the future of its studio business, according to Semafor. The website reported that Anson had pushed the company to redefine its business for the "AI era" or put itself up for sale. Apollo partners Aaron Sobel and Lee Solomon had discussed acquisitions when funds affiliated with the group announced an investment in Legendary. "We also see attractive M&A opportunities in the future," they said in Legendary's official statement at the time, outlining their view of the opportunities available to the studio.
Apollo's ties to Legendary stem from an equity investment announced by funds managed by affiliates of the group when they became investors in the studio. The investment specified in the announced agreement totalled $760 million, according to Legendary's official statement on the deal. The statement described the financing as an equity investment as it announced Apollo funds joining the company's investors. In a subsequent ownership development, Legendary announced the purchase of Wanda Group's remaining stake, according to a Reuters report published by Investing. Reuters reported when that transaction was announced that Legendary's board would be split equally between the company's management and Apollo after the stake purchase was completed.
On the target company's financial performance, Lionsgate reported revenue of $776.6 million in its latest reported quarter before the takeover news, according to its official quarterly earnings statement. The company said the figure represented an increase of 48% from the corresponding quarter a year earlier, in the year-on-year comparison accompanying the revenue announcement. Adjusted operating income before depreciation and amortisation, the metric the company uses in its results, was about $79.3 million in the same quarter. Lionsgate reported library revenue of $987 million over the last 12 months, according to its latest earnings disclosure. The period covered by the library revenue figure runs through the end of the latest reported quarter, according to the company's quarterly statement.
The takeover offer follows Lionsgate's announcement that it had completed the separation of its studio business from Starz, according to the company's official separation statement. The businesses became two independent publicly traded companies following the separation, while the arrangement included consolidating Lionsgate's share structure into a single class. On its upcoming disclosure calendar, Lionsgate has set the date for reporting results for the second quarter of its fiscal year 2027, according to its earnings-date announcement to investors. The upcoming disclosure covers the fiscal quarter ended September 30, 2026, the period specified by the company in its announcement of the next quarterly results. The results will be released after the market closes on Thursday, November 5, according to the schedule Lionsgate officially announced to analysts and investors.