Lionsgate Buys Summit Entertainment for $412.5 Million
Last week, Lions Gate purchased Summit Entertainment for (insert Dr. Evil’s voice) $412.5 Million. Mwhahahaha!
From LA Times:
Bringing Hollywood’s two biggest independent film studios and the blockbuster young adult franchises “Twilight” and “The Hunger Games” into one powerful entity, Lions Gate Entertainment has agreed to acquire Summit Entertainment for $412.5 million in cash and stock.
The two Santa Monica-based companies have engaged in on-and-off merger talks since late 2008 as Lions Gate has sought to bolster its library of film and TV properties and Summit’s investors have tried to find a way to cash in on the lightning-in-a-bottle success of its “Twilight” movie series, which has grossed $2.5 billion worldwide over four films.
The acquisition will provide a windfall to Summit’s investors, among them Ebay co-founder Jeff Skoll’s film company Participant Media and private equity fund operator Suhail Rizvi’s Rizvi Traverse Management. Summit’s investors previously received a $200-million dividend as part of a recapitalization in early 2011.
In an announcement issued (last) Friday, Lions Gate said the majority of the purchase price would be funded by cash on hand at Summit. The rest will be paid for by $55 million of Lions Gate’s cash reserves, $45 million from new debt issued by Lions Gate, and another $20 million of cash or stock that Lions Gate must issue within 60 days.
Summit comes into the deal with about $200 million in net debt, which is secured by that studio’s existing assets and will not be assumed by Lions Gate.
Summit was in net debt? Wow. I know we’re a week late posting this. What are your thoughts? How will this effect Breaking Dawn Part 2?