Lionsgate Studios Potentially Acquired by Legendary Entertainment, Shares Down 2.5%

Lionsgate Studios, a leading movie producer, is a potential acquisition target for Legendary Entertainment LLC, backed by Apollo Global Management. The deal makes sense as Lionsgate is a "pure-play studio" with a stable of library content generating a third of its revenue at a high profit margin. Lionsgate has also adopted AI to cut production costs and make movies and TV shows viable. Analysts have a Moderate Buy consensus rating on LION stock with a 31.2% upside potential.

Legendary Entertainment LLC, the independent film and TV studio behind the Dune trilogy and A Minecraft Movie, is considering a takeover of Lionsgate Studios Corp., according to sources familiar with the matter [1]. The potential acquisition comes as Legendary, backed by Apollo Global Management, seeks to expand its portfolio and leverage Lionsgate's established content library and distribution network.

The talks between the two companies began after Lionsgate finalized its separation from the Starz Entertainment Corp. TV network and streaming service in May. The discussions initially focused on a potential partnership to produce a handful of films, allowing Legendary to assess the compatibility of the two companies before deciding on a full takeover [1]. Lionsgate's shares jumped 8.6% after the news was reported and ended the day up 20% [1].

Lionsgate, currently valued at a market cap of $1.8 billion, owns popular film franchises such as John Wick, The Hunger Games, and Twilight, and has produced TV hits like AMC’s Mad Men. The studio's library of content accounts for a third of its revenue at a high profit margin [1]. Additionally, Lionsgate has adopted AI to cut production costs and enhance the viability of movies and TV shows.

Analysts have a Moderate Buy consensus rating on Lionsgate stock (LION) with a 31.2% upside potential, indicating optimism about the company's future prospects [2]. Josh Grode, Legendary’s chief executive officer, has previously stated that Apollo's financial backing is crucial for potential acquisitions in the entertainment industry [1].

Last year, Legendary and Apollo were linked to a potential acquisition of the Paramount Pictures film studio, and later to a potential acquisition of parent company Paramount Global. However, these deals did not materialize, and the Paramount Global acquisition is now being pursued by David Ellison’s Skydance Media LLC [1].

References:
[1] https://www.bloomberg.com/news/articles/2025-07-11/apollo-backed-legendary-weighs-acquisition-of-lionsgate-studios
[2] https://www.livemint.com/companies/news/apollobacked-legendary-weighs-acquisition-of-lionsgate-studios-11752264920887.html