Lionsgate Stock Jumps on Acquisition Scuttlebutt

Lionsgate’s stock took a mid-morning bounce Jan. 18 following media reports the studio/distributor is in the M&A crosshairs of media giants Amazon, Verizon, CBS and Viacom.

Shares increased 5% the day after a Deadline.com report – citing sources familiar with the situation – said the Santa Monica, Calif.-based company was in active merger discussions. Lionsgate shares have increased 20% in value since last November.

Lionsgate, which is headed by CEO Jon Feltheimer, has a box office hit in Wonder, which has generated $120 million at the box office since Thanksgiving. The studio ranks fourth in nascent domestic box office.

With Disney’s pending $52.4 billion acquisition of 20th Century Fox, consolidation within the media industry has renewed interest as online powers Netflix and Amazon expand their entertainment prowess globally.

Lionsgate, which has a robust home entertainment business, in addition to multiple digital ventures, is also a major producer of television content. The company’s $4.4 billion purchase of Starz in 2016 underscoring further its presence in premium television.

The company has also expressed interest in ancillary revenue streams, including a theme park in South Korea and live theatrical productions – ventures that require significant capital investment.

Last August, Reuters reported merger negotiations between Lionsgate and Hasbro ended following an impasse on the price.

Michael Burns, vice chairman of Lionsgate, last month told CNBC the Disney/Fox pact was good news since it eliminates one competitor from the market, while further validating the value of content.

“I think Lionsgate actually thrives in chaos. You’re in a place right now where you are going to see serious consolidation out there,” Burns said.

Lionsgate reports third quarter results Feb. 8.

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