Starz could see a nice consolation prize if Lionsgate stumbles in its effort to close the $4.4 billion acquisition deal they announced yesterday, according to an SEC filing that fleshes out terms of the agreement.
Lionsgate would have to pay Starz $150 million if the studio’s shareholders don’t approve the deal, $175 million if Lionsgate changes its mind, and $250 million if it can’t raise the debt financing.
It’s a two-way street. Starz would have to pay Lionsgate a $150 million break-up fee if it backs out, for example to accept a higher offer.
Either side can scrap the deal if it isn’t completed by December 31, although either can extend the deadline to March 31 if they’re just waiting for regulatory approvals.
The terms of the deal require Lionsgate shareholders to reclassify its stock into equal parts of voting and non-voting shares, to be used to buy Starz’ stock. If Lionsgate investors don”t approve the change, then it will have to pay Liberty Media Chairman John Malone $36.30 a share for his Starz stock — instead of the mix of cash and stock announced yesterday — if he wants.