Robbins Arroyo LLP: Acquisition of Starz (STRZA) by Lionsgate Entertainment Corp. (LGF) May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of Starz (NASDAQ: STRZA, STRZB) by Lionsgate Entertainment Corp. (NYSE: LGF). On June 30, 2016, the two companies announced the signing of a definitive merger agreement pursuant to which Lionsgate will acquire Starz. Under the terms of the agreement, holders of Starz Series A common stock will receive 0.6784 of a share of Lionsgate stock and $18.00 in cash for each share of Starz common stock, the value of which is equivalent to $32.21, while holders of Starz Series B common stock will receive cash and stock valuing $33.73.
Is the Proposed Acquisition Best for Starz and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at Starz is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $32.21 merger consideration for Series A holders represents a premium of only 14% based on Starz’s closing price on June 29, 2016. This premium is below the average one day premium of over 17% for comparable transactions within the past five years. Further, the merger consideration for both classes of shares is significantly below the target prices of $35.38 set by an analyst at FBN Securities on April 29, 2016 and $35.00 set by an analyst at Macquarie on June 24, 2016. In the last three years, Starz traded as high as $46.59 on July 17, 2015, and most recently traded above the Series A merger consideration – at $32.32 – on January 13, 2016.
In light of these facts, Robbins Arroyo LLP is examining Starz’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Starz shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
Starz shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.