Legendary Entertainment has revived talks to buy Lionsgate and submitted an offer, Bloomberg reported, citing people familiar with the matter. Shares jumped from about $10.68 to $12.73 in five minutes and were up about 16% at $12.30 by 2 p.m. Lionsgate, Legendary and Apollo declined to comment.
Lionsgate's stock spent Tuesday morning doing almost nothing. Then it repriced in a single step.
Legendary Entertainment, the film and television producer owned by Apollo Global Management and its management, has revived takeover talks with Lionsgate Studios and submitted an offer, according to Bloomberg, which cited people familiar with the matter in a report published at 12:39 p.m. Eastern. The two companies have held on-and-off talks since Legendary weighed a bid last year, the people said. No price, structure or financing was reported.
Representatives for Legendary, Lionsgate and Apollo declined to comment.
The minute it moved
From the open until 12:38 p.m., Lionsgate traded between $10.61 and $10.80, mostly on fewer than 10,000 shares a minute. In the 12:39 p.m. minute, about 322,000 shares changed hands at around $10.68. The next one-minute bar in the data, at 12:44 p.m., showed $12.73 on about 856,000 shares.
The stock did not hold that level. It traded between $11.94 and $12.59 for the rest of the early afternoon and was at $12.30 at about 2 p.m., up 15.8% from Monday's close of $10.62, with about 8.5 million shares traded. That move added roughly $500 million to the company's market value, which stood at about $3.66 billion. The S&P 500 was up about 0.4%.
The timing ties the move tightly to the report. What the timing cannot say is what the offer is worth.
A history of fading spikes
Lionsgate holders have seen a one-day jump fade before. The stock closed at $16.36 on June 16, up 13.8% in a day on 16.4 million shares, and then fell over four months to Monday's close of $10.62, about 35% lower. Other suitors have expressed interest in the past, TheWrap has reported, including Banijay, Mediawan and France's Bolloré Group.
That history is the case for caution. An offer without a disclosed price leaves the market to guess both the chance of a deal and the size of the premium, and the stock's recent record shows how quickly a large gain can erode.
Market implications
One reading is that this time is different. A submitted offer is a step beyond talks, the parties have been circling each other for more than a year, and past interest from other buyers raises the possibility of a competitive process. On that view, Tuesday's price is a floor.
A second reading is that nothing has been confirmed. All three parties declined to comment, no terms have surfaced, and the stock has already shown that a sharp one-day gain can unwind. The quick retreat from the first trade at $12.73 suggests some holders used the jump to sell.
What to watch
Any statement from Lionsgate, Legendary or Apollo; a reported price or structure; any regulatory filing describing the offer; and whether the stock holds above $12 through the close and into Wednesday. A disclosed price would turn a probability bet into a merger-arbitrage trade, and the gap between that price and $12.30 would show how much doubt remains.