Lions Gate Bites Summit Entertainment

Lions Gate Entertainment Corp. (NYSE:LGF) is set to buy “Twilight” film series producer Summit Entertainment for about $400 million in equity.

Summit’s network of foreign distributors could be beneficial to Lions Gate. Meanwhile, Lions Gate is about to launch, “The Hunger Games,” a new series of movies for young adults, just as Summit is completing its “Twilight” series. The last in the series, “The Twilight Saga: Breaking Dawn — Part 2” is slated for a Nov. 16 release.

Evercore Partners analyst Alan Gould had positive comments: “M&A has been an important element of value creation for Lionsgate … The company acquired Trimark for approximately $50 million in late 2000, Artisan for approximately $375 million in late 2003, which was a major driver of its stock, its U.K. subsidiary in 2005, Debmar Mercury, its TV syndication division in 2006, Mandate Pictures in 2007, and TV Guide Network in 2009. While media investors typically loathe M&A, we have found horizontal acquisitions executed at the right price can be accretive – it is expensive vertical acquisitions that have typically led to shareholder destruction.”

Here’s how shares of Lions Gate are reacting to the news:

Lions Gate Entertainment Corp. (NYSE:LGF): LGF shares recently traded at $8.42, up $0.01, or 0.12%. They have traded in a 52-week range of $5.69 to $8.87. Volume today was 211,738 shares versus a 3-month average volume of 712,571 shares. The company’s trailing P/E is 41.48, while trailing earnings are $0.20 per share.

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