Liberty Strategic Capital, a private equity fund led by former Secretary of the Treasury Steven Mnuchin, has acquired a hefty 5.5% stake in Lionsgate Class A voting shares at a strategically sensitive moment for the company as it prepares to close a $500 million acquisition of eOne and plans to split up its studio and streaming businesses.
The $30 million investment works out to a 1.7% overall stake in Lionsgate, including its Class B, or non-voting, shares. The company has a market cap of about $1.79 billion.
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Lionsgate declined to comment on the news, revealed in an SEC filling this afternoon, that Liberty 77 Fund (a buyout fund operating by Liberty Strategic Capital) purchased 4,594,863 shares of Lionsgate in several dozen transactions between Aug. 10 and Aug. 30 at a price ranging from just over $7 a share to $7.46.77
The filng hints that the long-gestating separation of Lionsgate and Starz, which the company said last month it expects to complete in the first quarter of 2024, may have prompted the move. It noted that Lionsgate “has publicly proposed a spin-off of its studio business as a separate public company.”
Mnuchin served as the 77th Secretary of the Treasury under former president Donald Trump from February of 2017 through January of 2021. He launched Liberty Strategic Capital that year. The firm’s site says it focused on technology, financial services/Fintech, and “new content.”
The document said the new stakeholder may contact other shareholders, management and board members of Lionsgate with “suggestions or proposals” on a wide range of issues — “including a potential investment by the Reporting Persons in a spin-off of the Issuer’s studio business or other restructuring, assets and liabilities, business and financing alternatives, the composition of the board of directors and such other matters as the Reporting Persons may deem relevant to their investment in the Issuer.”
“The Issuer has publicly proposed a spin-off of its studio business as a separate public company, LG Orion Holdings Inc. (“SpinCo”). The Reporting Persons may engage in any of the activities described above with respect to SpinCo, prior to or following completion of the spin-off.”
Mnuchin, a former Goldman Sachs banker, had a spell as an investor in media and entertainment. He led the board of Relativity Media, which later filed for bankruptcy, and co-founded defunct hedge fund Dune Capital and spinoff RatPack-Dune Entertainment (with Brett Ratner and James Packer), which led slate financing deals. Movies he’s backed include Black Swan, The Devil Wears Prada and Avatar.
The entrance of any kind of activist, or possible activist, investor is generally good new for a company’s stock price. Lionsgate shares are up nearly 5% in after-hours trading.
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