Lionsgate Stock Jumps on Takeover Speculation

Lionsgate stock jumped nearly 7% to an all-time high closing price on Thursday on speculation that it could be a takeover target.

Shares of the studio rose $2.22 to $34.50 following a report that potential buyers include Amazon, Verizon, and a combined CBS-Viacom. Lionsgate did not immediately respond to a request for comment.

The takeover rumors have emerged amid Wall Street’s expectation for more consolidation among major media and entertainment companies — particularly since Disney’s announcement of a $52.4 billion deal to buy 21st Century Fox assets.

Additionally, speculation is being fueled further by Apple’s reveal on Wednesday that it will bring back the vast majority of the $252 billion in cash that it held abroad under the provisions of the new tax code that President Donald Trump signed into law last month. Other tech giants like Microsoft are expected to follow suit.

Under a CBS-Viacom-Lionsgate combination, the movie businesses would give the new company enough scale to compete with the Hollywood majors, led by Disney and Warner Bros. In terms of studio market share, Liongsate took the sixth spot in 2017 with $885.1 million for an 7.96% market share with 31 movies, led by “La La Land,” “Wonder,” and “John Wick: Chapter 2.” Viacom’s Paramount switched places with Lionsgate to wind up in seventh with $522.7 million with a 4.9% share from 18 pics, led by “Transformers: The Last Knight” and “Daddy’s Home 2.”

Amazon and Lionsgate teamed on the release of awards contender “The Big Sick.” Amazon also saw success in “Transparent” and “Manchester by the Sea,” which won two Oscars last year.

A deal with Verizon, the nation’s biggest telecommunications company, would provide plenty of content for distribution. Verizon recently extended its mobile rights deal for the NFL and made a deal with the NBA under which consumers can buy and stream live, out-of-market games.

Lionsgate produces “Orange Is the New Black,” and owns the premium cable network Starz and several streaming services including Tribeca Shortlist, Kevin Hart’s Laugh Out Loud and Pantaya.

Lionsgate’s shares have gained about 25% since early November. The company topped Wall Street’s expectations in its Nov. 9 earnings report. Revenues were $941 million, 47% higher than the year-ago period, primarily because of contributions from Starz, which Lionsgate bought in late 2016 for $4.4 billion.

The potential Lionsgate buyers were first identified by Deadline Hollywood.

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