Add a potential multi-billion dollar entertainment industry merger to the long list of economic casualties from the Brexit less than a week after the U.K.’s historic vote to leave the European Union.
While global stocks have rebounded temporarily from the thrashing they took in the wake of last week’s U.K. Decision, it appears that the long-rumored merger between Lionsgate and premium cable network Starz might have been derailed by the global financial uncertainty stemming from the Brexit. That’s according to the New York Post, which cited an anonymous source in a report on Tuesday claiming that one of the banks lined up to provide financing for the potential tie-up has pulled out of the deal due to the fact that the value of the British pound dropped roughly 10% following the Brexit vote.
Coins2Day reached out to Lionsgate and Starz for comment and will update this article with any response. According to the Post, the deal talks could be revived if economic conditions rebound sufficiently.
Coins2Dayreported in February that Lionsgate—which is Hollywood’s largest independent movie studio, having produced hits such as the Hunger Games series—had rekindled deal talks with Englewood, Colo.-based Starz. The two companies previously discussed a merger after billionaire Liberty Media Chairman and Starz shareholder John Malone exchanged part of his Starz holdings for a 3.4% stake in Lionsgate along with a seat on the studio’s board.
Months later, an agreement had yet to be reached, even amid talk of more consolidation throughout the entertainment industry, including Lionsgate being mentioned as a potential suitor for Viacom’s Paramount Pictures. But, Lionsgate-Starz talks reportedly heated up in recent weeks after Starz CEO Chris Albrecht said publicly that his company could be involved in the industry’s wave of consolidation.
Starz has a market value of roughly $2.7 billion based on its current share price, though any sale to Lionsgate would likely come at a slight premium. The premium cable company’s stock is up 4.4% over the past week, while Lionsgate’s own shares were down nearly 6% over the same period before trading started Wednesday morning.