Apple Inc’s acquisition of Lions Gate Entertainment Corp.

Abstract

This dissertation intends to analyze the potential acquisition of Lions Gate Entertainment Corporation by Apple Inc. Apple is putting a notable amount of resources into competing in the entertainment market, and this acquisition would significantly improve its competitiveness in the industry. An analysis of the industry and the individual companies is provided, to substantiate the deal's rationale.Valuations are done of the individual companies and the synergies created by the merger to work out the transaction details. By finding the value of the merged entity with synergy effects, the combined enterprise value suggests the maximum bid that Apple can offer for the target. The intrinsic enterprise values of Apple and Lions Gate are approximately $3 trillion and $5.2 billion, respectively. The proposed merger creates $1.65 billion in net synergy value. The recommended bid price for each share is as follows: Apple will pay a 30% premium over market prices for each of Lions Gate's share classes, which equals a bid price of $18.2 for Class A and $17.0 for Class B. The total purchase price adds up to $3.9 billion.The recommended transaction will be structured as a friendly takeover, as the acquisition will create value for shareholders of both companies. Apple will finance the takeover with 100% cash to signal confidence in the merger and the vast amount of excess cash on its balance sheets. By 2024, the acquisition will create value for Apple shareholders with a positive accretion yield.

Date of Award	29 Jun 2022
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	António Borges de Assunção (Supervisor)