MSG Entertainment to acquire MSG Networks for £668 million

Written by: Wajeeh Khan
March 26, 2021
  • MSG Entertainment to acquire MSG Networks Inc. for £668 million.
  • The deal will be tax-free for both companies and their shareholders.
  • MSG Networks' stockholders will get 0.172 MSG Entertainment shares.

Madison Square Garden Entertainment Corp. (NYSE: MSGE) said on Friday that it will acquire MSG Networks Inc (NYSE: MSGN). The two companies have signed a stock deal that values the sports media company at roughly £668 million.

MSG Networks shares slid more than 0.5% in premarket trading on Friday and slid another 0.5% later in the day. Including the price action, the stock is currently exchanging hands at £11.68 per share after recovering from a low of £6.59 per share in the first week of April 2020, when the ongoing Coronavirus pandemic wreaked havoc on the global financial markets.

The deal will be tax-free for both companies and their shareholders

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For MSG Networks stockholders, the deal will replace each MSG Networks share with 0.172 shares of MSG Entertainment, valuing the New York-based firm’s stock at £11.72 a piece that translates to a 7.0% discount on the price at which MSG Networks closed the regular session in the stock market on Thursday.

For both companies and their shareholders, the merger that will establish a leading company in the media and entertainment sector, is likely to be tax-free. The news comes a day after the U.S. financial services company Robinhood said it intends to further loosen Wall Street’s grip on new listings.

Compared to the unaffected closing price on 10th March, however, the exchange ratio equates to a 4.0% premium. In separate news from the United States, investment management company Blackstone Group Inc. said on Friday it made executive changes in BAAM’s GP Stakes platform.

MSG Entertainment’s President comments on the acquisition

President Andrew Lustgarten of MSG Entertainment commented on the acquisition on Friday and said:

“MSG Entertainment is actively executing a plan designed to grow the Company beyond its established collection of assets into one that is pioneering the next generation of entertainment. We have always believed in the value of live sports and look forward to welcoming MSG Networks back into the fold as part of a transaction that we are confident would enhance our financial flexibility and set the stage for continued growth and value creation.”

MSG Entertainment opened at £133.52 per share on Friday and is currently trading at a per-share price of a lower £128.44. In comparison, the stock had started the year 2021 at £129.93 per share. The price action should come in handy if you are interested in investing in the stock market.  

At the time of writing, the American sports holding company has a market capitalisation of £3.20 billion.