Lionsgate Board Approves Collapse of Dual-Class Stock Share Structure

Lionsgate’s board of directors has adopted a recommendation from its special committee to collapse the company’s dual-class stock structure, according to a regulatory filing with the U.S. Securities and Exchange Commission .

The recommendation will be included as a proposal to shareholders in a proxy/registration statement set to be filed later this year in connection with the separation of the company’s studio business and Starz.

If approved by shareholders, the shares would be collapsed into a single class of stock and give Class A voting shares a 12% premium as part of the process.

The move comes after Lionsgate executives revealed during the company’s fourth-quarter earnings call in May that the company had formed a special committee to explore collapsing the dual-class structure.

“The special committee is discussing with a variety of experts what the ratio should be, the premium for the A’s,” vice chairman Michael Burns told analysts at the time. “And then once that’s established — and obviously you’re going to have a Board for the studio and a Board for the holding company and then a Board for Starz on full separation — we’re going to have a shareholder vote and both on this extraordinary transaction, both the A shareholders and the B shareholders will vote. Obviously, a lot of that’s going to be about the ratio between the A’s and the B’s and what percentage of the studio they own.”

Shares of Lionsgate’s Class A stock climbed more than 5% in after-hours trading on Monday after closing at $8.56 per share.

Lionsgate Studios, which encompasses both Lionsgate’s Motion Picture Group and the Television Studio segment — as well as the company’s 20,000-plus title film and TV library — began trading on the NASDAQ as a separate public company in May with an enterprise value of $4.6 billion.

Coming up, Lionsgate is expected to hold 87.2% of the total shares of Lionsgate Studios, while public shareholders and founders of the special purpose acquisition company Scream Eagle Acquisition Corp. and common equity investors are expected to own an aggregate of approximately 12.8% of the combined company.

The Starz premium subscription platform is not part of Lionsgate Studios and will continue to be wholly owned by Lionsgate.

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