Lionsgate has submitted a final and best offer in recent days, which was significantly lower than the $173 million offered by The Najafi Companies late last year
Lionsgate is not going to acquire STX Entertainment. This will leave the cash-strapped studio unable to close its deal at The Najafi Companies and find financing to repay its $150 million debt.
Lionsgate submitted in recent days a best-and-final offer that was substantially lower than that offered by The Najafi Companies last year at $173 Million, according to an individual familiar with the negotiations. Another source said that STX founder Robert Simonds rejected the offer and that his top executives also rejected it.
To learn more, become a member.
That leaves the Phoenix-based Najafi — in partnership with Tom Staggs and Kevin Mayer’s Forest Road SPAC — to close an acquisition that was announced in December. Lionsgate was given a 45 day window in which to make its own bid for studio behind modest box-office hits like “Hustlers,” “Bad Moms” “Greenland.”STX must continue to negotiate with JP Morgan, its primary lender, to extend terms due in February.
A spokesperson for Lionsgate did not comment. Neither did a spokesperson from STX or Najafi companies.
STX has suffered from a cash crunch for years, even though it merged in 2020 with Eros, a publicly traded Indian streaming service. That merger followed a record $319 million box office in 2019 for the studio, fueled by hits like Jennifer Lopez’s “Hustlers” “The Upside”As well as flips “Ugly Dolls,”It only made $20 million in domestic sales.
ErosSTX was hard hit by the pandemic, due to production delays and lack of interest in its few films. ErosSTX made just $8.8million from four films in 2021. $6 million came from the overseas sales of Guantanamo Bay’s true story. “The Mauritanian.”Kristen Bell’s comedy, and two of its finished films were sold recently. “Queenpins”The Chris Pine-Ben Foster thriller “The Contractor,”Paramount.
ErosSTX did not file a 2021 financial report with the SEC. However, an SEC filing states that they were granted an extension to do so by May 31. After the stock rose above the $1 threshold, the public company was also relisted on Nasdaq on February 21.
The company’s stock price has plunged 90% in the past year, from $39.20 per share a year ago to trade at $3.80 per share on Thursday.
A second individual close to the talks said a large group of executives from STX, Najafi and Forest Road had dinner at Brentwood’s popular Toscana restaurant on Wednesday night after a day of deal work. This insider said that all options were still open for STX’s next moves.
STX’s problem is that STX has no other strategic buyers. The 8-year-old company is a little in content and has suffered massive losses as production has been constantly interrupted.
Multiple individuals who have looked at STX as a potential acquisition told that STX’s overhead is currently north of $70 million per year, which many deemed unsustainable. According to an insider familiar with the Lionsgate negotiations, the acquisition was not possible. “must-have” for the mini-major, and that STX’s overhead was hard to justify.
