Lionsgate Considers Selling a Minority Stake in its Studio Division

Lionsgate (NYSE-LGF.A) stock rose about 1% Wednesday morning after talk of selling a stake in their studio business. 

The reason for this change in strategy for the media and entertainment company was explained by CNBC. “Selling a stake in the studio to a private-equity firm or strategic company will set a valuation floor for the business to trade on its own. It would also bring an immediate jolt of capital to Lionsgate, whose shares have plummeted in recent years. Lionsgate’s market valuation is about $1.8 billion, down from nearly $7 billion in early 2018.”

There has also been talk about Lionsgate selling a 20% stake in Starz to multiple potential buyers, but according to CNBC, “those talks haven’t ended, but no deal is imminent.” 

Lionsgate vice chairman, Michael Burns, made it clear that the company is giving much thought to the potential changes during a Bank of America media and entertainment conference in July. “We’re not going to make a dumb deal on one or both sides of the business. I think our shareholders will be very happy with the outcome.”