Does Alibaba Plan To Take Control Of Lionsgate?

Lionsgate shares rose 5.3% to $33.00 today after The New York Post reported that the Chinese e-retail giant is eager to buy Mark Rachesky’s 37.4% stake in the independent studio. Although Lionsgate isn’t commenting, there’s enough in the wind to make the scenario plausible. Alibaba is flush with cash after its record-setting $25B IPO last month — and founder Jack Ma will be in Hollywood next week to talk with different studios. He already knows Lionsgate: Alibaba

partnered with the studio this summer when they launched their Chinese subscription streaming service, Lionsgate Entertainment World, which features the studio’s movies and TV shows.

And Rachesky, a hedge fund investor, might be eager to sell. The former protege of activist investor Carl Icahn broke with his mentor when he tried to buy Lionsgate. Rachesky also bought in, and he became Lionsgate chairman.

But there’s always a question of price. Based on today’s closing price, Rachesky’s stake is worth about $1.7B. The company probably would not want a sale for less than $50 a share, Wunderlich Securities’ Matthew Harrigan says, but Rachesky “may have more of a trader mentality” and be willing to settle for less.

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