Deals and IPOs

Film studio Lions Gate to buy Starz for $4.4 billion

"Catching Fire"
Source: Lionsgate

Lions Gate Entertainment, the film studio behind the Hunger Games movie franchise, said it would buy premium television network Starz for $4.4 billion in cash and stock, in a deal that would unite two media companies with ties to cable mogul John Malone.

Lions Gate will pay $32.70 per share for Starz, representing a premium of nearly 16 percent to Starz's closing price on Wednesday.

Shares of Lions Gate were up 8.6 percent in premarket trading. Starz shares were up 10.6 percent below the offer price at $31.25.

Lions Gate expects the deal to be "highly accretive," it said on Thursday.

As part of the deal, which was approved by the boards of both companies, Lions Gate's shares will be equally split into voting and non-voting shares.

The two companies had held on and off talks for more than a year. Starz was spun off from Malone's Liberty Media in 2013.

Since then there have been reports Starz had been in merger talks with a range of media companies, from Twenty-First Century Fox to CBS and AMC Networks.

Starz, which competes with HBO and Showtime, also develops original programming such as "Power," a drama about a New York City drug dealer and "Outlander," a fantasy series.

Lions Gate and Malone own shares in Starz, while Malone is also a Lions Gate shareholder who sits on its board.

PJT Partners was the lead financial adviser to Lions Gate, while J.P. Morgan, Bank of America/Merrill Lynch, Deutsche Bank and Credit Suisse were its financial advisers.

Starz was advised by LionTree Advisors.