Over the past year, artificial intelligence news has dominated the entertainment sector. However, traditional media assets are now attracting increasing interest among strategic acquirers. This can be seen Friday after the rumors emerged that Lionsgate Studios (LION) had attracted takeover interests from numerous parties, causing its stock prices to shoot up.
As per reports, Bolloré Group of France showed an interest in acquiring the studio. Moreover, Banijay Group is also exploring the possibility of making an offer. LIONSgate reportedly has an investment bank advising it on the possibilities of strategic alternatives, but it is not yet sure whether there will be a deal as Lionsgate might end up staying independent. These rumors come just a few weeks after Lionsgate posted its best profit in over a decade, meaning that improved performance might now attract strategic buyers.
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Lionsgate is one of the biggest independent film and television studios in Hollywood. It produces movies, television programming and boasts one of the most valuable film and television libraries in the world. It is headquartered in Santa Monica, California and possesses such recognizable movie franchises as John Wick, The Hunger Games, Saw, and Now You See Me. Lionsgate currently has a market capitalization of $3.96 billion.
Even with the gains seen today, LION is currently trading 16.9% below its 52-week high of $16.70. Nevertheless, the stock price has risen by 145.7% from the last year's low of $5.65, fueled by increasing optimism after the split of the studio business from parent company. Whereas the S&P 500 Index ($SPX) continues reaching new record heights, LIONSgate has been mostly traded on the basis of the company's catalysts including movie releases, restructuring initiatives and now takeover speculations.
In terms of valuation, Lionsgate trades at around 1.5 times sales, a relatively small multiple for a premium content owner with an extensive library of intellectual properties. Despite a high forward price-to-earnings ratio of 84.61 times, this multiple is reflective of the recovery of profits after several years of restructuring. The focus of the investors, however, lies on improving free cash flow generation and the long-term value of the content library, which has already brought more than $1 billion of TTM revenue for three consecutive quarters.
Source: Yahoo Finance Top News — This article was automatically imported from the source. Read full article at original source →
