Madison Square Garden Entertainment Corp and MSG Networks Inc have reached a final agreement for the former to purchase the latter in an all-stock, fixed-exchange-rate contract.
MSG Entertainment aims to achieve a greater share of the emerging sales opportunity associated with the possible growth of regulated sports betting in its market as a result of the purchase.
According to the company, the integration of the corporations’ broadcast, internet, and venue properties will provide a strong outlet for future sports gaming partners, which will produce considerable additional revenue in the years ahead.
MSG Entertainment and MSG Networks, as well as their stockholders, are expected to benefit from the merger tax-free. MSG Networks stockholders will earn 0.172 shares of MSG Entertainment Class A or Class B common stock for each share of MSG Networks Class A or Class B common stock they own after the exchange closes.
Pioneering the next generation of entertainment
Andrew Lustgarten, President of MSG Entertainment, 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 expects that the deal would result in the creation of a leading entertainment and media corporation with a more diversified revenue base that will be well-positioned to offer creative offerings across all of its properties.
The merged group will, it says, have a better liquidity role to finance its live entertainment division, which is now returning to normal operations after shutting down its venues due to the pandemic.
In addition, the new corporation will have more strategic freedom to finance existing expansion plans, such as MSG Sphere at The Venetian, a proposed state-of-the-art location in Las Vegas, as well as potential entertainment and media opportunities.
Andrea Greenberg, President and CEO of MSG Networks, said: “We anticipate significant benefits from rejoining MSG Entertainment, including creating a combined company with greater diversification and resources. This would, in turn, help drive new innovative opportunities across both the entertainment and media businesses, ultimately creating significant value for our collective shareholders.”
The deal is scheduled to close in the third quarter of calendar year 2021, subject to customary closing conditions.