Shares of Starz and Lions Gate Entertainment Corp. soared in premarket trade Thursday, after Lions Gate announced an agreement to buy the subscription video service in a cash and stock deal valued at $4.4 billion. Under terms of the agreement, Lionsgate will exchange $18 a share and 0.6784 of its shares for each Starz Series A share outstanding, and $7.26 in cash and 0.6321 of its shares for each Starz Series B share outstanding. Based on Wednesday's closing prices, the bid represents a 14% premium to Starz Series A shares. The deal is expected to close by year end. Lions Gate said it plans to fund the cash portion of the deal with a combination of newly issued bank and bond financing. "We expect the acquisition to be highly accretive, generate significant synergies and create a whole that is greater than the sum of its parts," Lions Gate Chief Executive Jon Feltheimer and Vice Chairman Michael Burns said in a statement. Starz Series A shares ran up 15% ahead of the open, while Lions Gate's stock soared 9.1%. Bloomberg reported late Wednesday that the companies were in advanced talks to merge.
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