Shares of entertainment company Lions Gate (NYSE:LGF.A) (NYSE:LGF.B) tanked in today’s trading after plans to merge its studio operations via a SPAC deal with Screaming Eagle Acquisition Corp. (NASDAQ:SCRM) emerged. This move is seen by TD Cowen analyst Doug Creutz as a strategic step towards potentially cashing in on Starz. Creutz, who maintains an ‘outperform’ rating and a $12 price target on Lions Gate, notes that this merger allows the company to keep its current financial structure intact and sidesteps potential bondholder complications.
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The deal is set to inject about $350 million into Lions Gate’s coffers, including $175 million through private investment in public equity financing. It also pegs the value of the new Lionsgate Studios at around $4.6 billion, with the business continuing to operate under its LGF.A and LGF.B tickers. Known for hit franchises like The Hunger Games, Twilight, and John Wick, Lions Gate’s 87% stake in the studios is now valued at $11.39 per LGF share.
What is the Target Price for Lions Gate?
Turning to Wall Street, analysts have a Hold consensus rating on Lions Gate stock based on one Buy, Hold, and Sell ratings assigned in the past three months, as indicated by the graphic below. After a 76% rally in its share price over the past year, the average Lions Gate price target of $10.50 per share implies 2% downside risk.
