The Acquisition of Lionsgate Class A Voting Shares by Liberty Strategic Capital

In a strategic move, Liberty Strategic Capital, a private equity fund led by former Secretary of the Treasury Steven Mnuchin, has acquired a substantial 5.5% stake in Lionsgate Class A voting shares. This acquisition comes at a crucial time for Lionsgate as the company prepares to finalize a $500 million acquisition of eOne and makes plans to separate its studio and streaming businesses. The investment of $30 million translates to an overall stake of 1.7% in Lionsgate, including its non-voting shares. With a market capitalization of approximately $1.79 billion, this acquisition holds significant implications for the future of both companies involved.

The details of the acquisition were revealed in an SEC filing, according to which Liberty 77 Fund, operated by Liberty Strategic Capital, purchased 4,594,863 shares of Lionsgate between August 10 and August 30. The purchase price ranged from just over $7 a share to $7.46.77. Lionsgate has chosen not to comment on this recent development, leaving room for speculation regarding the motives behind the acquisition.

The filing suggests that the impending separation of Lionsgate and Starz may have prompted this move. Lionsgate had publicly proposed a spin-off of its studio business as a separate public company. The acquisition by Liberty Strategic Capital hints at the potential interest in being involved in a spin-off of Lionsgate’s studio business or other forms of restructuring. The document further states that the new stakeholder may engage in discussions with other shareholders, management, and board members of Lionsgate to present suggestions or proposals regarding various matters related to the investment.

Steven Mnuchin, the former Secretary of the Treasury, founded Liberty Strategic Capital in 2021. The focus of the firm, as stated on its website, lies in technology, financial services/Fintech, and “new content.” Mnuchin, a former Goldman Sachs banker, has also had previous involvement in the media and entertainment industry. He led the board of Relativity Media, which later faced bankruptcy, and co-founded the defunct hedge fund Dune Capital and its spinoff RatPack-Dune Entertainment. Mnuchin’s track record includes backing movies like Black Swan, The Devil Wears Prada, and Avatar.

The entrance of an activist or potential activist investor often has positive implications for a company’s stock price. Following the news, Lionsgate shares experienced a nearly 5% increase in after-hours trading. This suggests that the market views the acquisition by Liberty Strategic Capital as a favorable development for Lionsgate’s future prospects.

The acquisition of a significant stake in Lionsgate Class A voting shares by Liberty Strategic Capital, led by former Secretary of the Treasury Steven Mnuchin, marks an important milestone in the company’s history. As Lionsgate progresses towards the completion of a major acquisition and plans to separate its studio and streaming businesses, the entry of Liberty Strategic Capital as a stakeholder brings new possibilities for restructuring and growth. With the impact already reflected in the rising stock price, it remains to be seen how this acquisition will shape the future of both Lionsgate and Liberty Strategic Capital.

Entertainment

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