Lionsgate Shares Surge on Takeover Speculation Amid Record Quarterly Profit

Shares of Lionsgate Studios rose sharply on Friday following reports that multiple strategic buyers are evaluating a potential takeover of the Hollywood studio. According to market reports, France’s Bolloré Group and Banijay Group are among the parties assessing the opportunity, prompting the studio to engage an investment bank to advise on strategic alternatives. Despite the market activity, Lionsgate has not confirmed any deal and may ultimately choose to remain independent.

The speculation comes shortly after the company reported its strongest financial results in over a decade for its fiscal fourth quarter. Lionsgate recorded revenue of $906.5 million, with operating income rising 52 per cent year-on-year to $117.5 million. The studio also posted an adjusted Earnings Before Interest, Taxes, Depreciation and Amortisation (OIBDA) of $165.4 million, marking its highest quarterly profitability in approximately 12 years.

Management attributed the robust performance to the global box office success of The Housemaid, which generated nearly $400 million worldwide, and strong ancillary performance from Now You See Me: Now You Don't. The studio also benefited from significant library licensing revenue, which contributed more than $1 billion in trailing 12-month revenue for three consecutive quarters.

Chief Executive Jon Feltheimer noted that more than half of the company’s film, television and live entertainment portfolio now consists of branded franchises. This shift towards established intellectual property has provided greater visibility and earning stability, a factor that analysts suggest could make the studio an attractive target for acquirers seeking premium content libraries.

Lionsgate currently holds a market capitalisation of $3.96 billion and trades at approximately 1.5 times sales, a relatively low multiple for a premium content owner. While the stock has risen 145.7 per cent from its yearly low, it remains 16.9 per cent below its 52-week high. The company reported free cash flow of $190.4 million, adding flexibility for future production investments.

Analysts maintain a cautiously optimistic outlook, with a consensus Moderate Buy rating and a mean price target of $14.54, implying potential upside of 4.8 per cent. The highest analyst target stands at $20, suggesting nearly 44 per cent upside. The improved cash flow generation and recurring licensing revenue are viewed as key drivers that could reinvigorate interest in a market where media consolidation had previously slowed due to higher financing costs.