YouTube multichannel network was target of Relativity's surprise $1.1 billion bid of mostly stock

Maker Studios said Disney’s $500 million-plus offer for the YouTube multichannel network has already been approved by the majority of its shareholders — leaving Relativity Media’s eleventh-hour opposing bid dead in the water.

“As per the announcement made on March 24, Maker Studios has entered into a merger agreement with The Walt Disney Co.,” a spokeswoman for the MCN said. “The agreement has been approved by Maker Studios’ board of directors and the majority of its shareholders and is expected to close in the next few weeks, subject to regulatory approval.”

Ryan Kavanaugh’s Relativity Media on Sunday submitted a surprise bid to acquire Maker. Under the proposed transaction, Relativity was offering up to $1.1 billion in mostly stock with a cash component, promising Maker execs and creators better financial rewards than with Disney’s cash bid of up to $950 million. Jefferies & Co. was Relativity’s banker advising the studio on the Maker bid.

SEE ALSO: Why Disney Is Taking the Huge Risk of Buying Maker Studios

In a statement, Relativity exec VP David Shane said, “We made a compelling offer and believe Maker Studios, its employees and its roster of talent would have greatly benefited from Relativity’s platform, its entrepreneurial approach and promising growth potential. We will continue to aggressively explore future opportunities that align with our strategy to accelerate digital content creation and distribution.”

Also Monday, the Superior Court for the State of California in L.A. rejected a request by Maker ex-CEO Danny Zappin and three other former execs seeking to block a shareholder vote on the Disney acquisition.

Zappin and the others last summer sued Maker Studios, alleging breach of contract and fraud over Zappin’s “ousting” as chief executive and that Maker Studios board members and officers “illegally issued shares to themselves and diluted the common stock for their own financial gain to the detriment of other Maker shareholders and take control Makers’ board so that they could ‘rapidly create a “liquidity event”‘ so that they could sell Maker and obtain significant returns on their investments.” The court on Monday denied the plaintiffs’ request for a temporary restraining order, which sought to halt the Maker shareholder vote on Disney pending the disclosure of “material” information about the prior lawsuit.

SEE ALSO: Is Disney’s Big-Game Hunting Paying Off?

Maker Studios claims to have more than 5.5 billion monthly video views and 380 million subscribers across its channels. As evidenced by the bidding war for Maker that broke out, Hollywood studios are eager to tap into MCNs to reach younger audiences, and they also see potential for developing TV shows and movies based on digital entertainment properties.

Disney, for its part, said it is acquiring Maker Studios to bring it “advanced technology” and insight into how millennial audiences discover and interact with short-form online videos, including Disney content. “Short-form online video is growing at an astonishing pace and with Maker Studios, Disney will now be at the center of this dynamic industry with an unmatched combination of advanced technology and programming expertise and capabilities,” Disney chairman and CEO Robert A. Iger said in announcing the deal last month.

Founded in 2009, Maker Studios has about 350 employees. After the Disney deal closes, they are all expected to join the Mouse House. Disney also said it has signed employment agreements with Maker’s senior management team, including exec chairman and CEO Ynon Kreiz.

Under the current plan, Kreiz will report up to Disney CFO Jay Rasulo — rather than having the MCN housed in the Disney Interactive division — because Disney wants to integrate Maker into all parts of the company, according to Kevin Mayer, Disney’s exec VP of corporate strategy and business development.

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