Lionsgate to spin off studio business in $4.6-billion SPAC deal

(Reuters) -Lionsgate will spin off its studio unit in a blank-check deal that values the business behind the "Hunger Games" and "John Wick" movie franchises at about $4.6 billion including debt, the company said on Friday.

The studio business will merge with Screaming Eagle Acquisition Corp, a special purpose-acquisition company (SPAC), to create a new public firm for Lionsgate's film and television assets that include about 18,000 titles.

The move, part of the company's plan to separate its studio unit from the Starz cable and streaming division, is expected to deliver about $350 million in gross proceeds to Lionsgate.

That includes $175 million from a private investment in public equity and the remaining from the SPAC's trust account.

The studio unit has enjoyed box-office success this year, thanks to hits like Keanu Reeves-starrer "John Wick: Chapter Four", which grossed more than $400 million. In the last reported quarter, the unit's revenue rose 21%, to $790 million.

Still, there are concerns about the outlook for the industry after dual Hollywood strikes by actors and writers earlier this year brought much of film and TV production to a standstill, forcing several companies to delay projects and releases.

Lionsgate said in November it expects an impact of up to $50 million from the strikes, spread over the current and next fiscal years.

The move comes at a time when speculation is growing over deals in the industry, with Warner Bros Discovery and Paramount in talks for a potential merger.

Lionsgate will hold a stake of 87.3% in the new company, while the SPAC's investors will hold the rest after the close of the deal, expected in the spring of 2024.

Blank-check mergers allow private firms to sidestep a lengthy IPO process to list their shares on bourses. They have largely fallen out of favor following a bumper run in 2020 and 2021, due to intense scrutiny from the U.S. regulators.

(Reporting by Manya Saini and Samrhitha Arunasalam in Bengaluru; Editing by Pooja Desai)