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.
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.
