Relativity Makes Last-Minute Offer for Maker Studios
UPDATED: The Ryan Kavanaugh-led company is looking to outbid Disney for the YouTube network.
Relativity Media has made a last-minute bid to buy YouTube network Maker Studios, a day before the online video producer is set to vote on a separate bid from Disney.
The Ryan Kavanaugh-led entertainment company is offering to buy Maker for $525 million in stock and cash, offering an additional $500 million in stock and cash if certain financial milestones are met, according to a source close to the deal. Relativity is also making $75 million worth of stock available to talent and executives who have been critical to the success of the company, the source added.
Relativity said in a statement that it believes its offer is superior to the one from Disney.
"Relativity's proposal fully values Maker Studios while providing its shareholders far more upside potential for growth than the Disney offer," the company said. "Our offer also includes a substantial opportunity for Maker's talent and employees to directly and significantly participate in the long-term growth of Relativity should the transaction be completed. Relativity and Maker Studios are natural partners. We both share a commitment to challenging the status quo, breaking down old models that don't work and inventing new ones that do. We are confident the Maker Studios board and its shareholders will recognize the full value of the Relativity offer."
Maker's shareholders are set to vote on the Disney offer on Tuesday, according to The Wall Street Journal, which first reported on Relativity's bid for Maker. A person close to the Disney-Maker deal told The Journal the companies have a binding agreement and the Relativity bid would have no effect on it.
Disney announced it had agreed to acquire Maker for $500 million in March, a bid that could reach $950 million if certain performance targets are met.
At the time, Maker CEO Ynon Kreiz said, "Disney is synonymous with the best entertainment and is the ideal partner for us, strengthening our position as the leading player in online video."
Disney CEO Bob Iger added: “Short-form online video is growing at an astonishing pace, and with Maker Studios, Disney will now be at the center of this dynamic industry with an unmatched combination of advanced technology and programming expertise and capabilities."
Maker, which was founded in 2009 as a multichannel network for YouTube talent, will become a standalone operation within Disney and remain based at its Culver City headquarters, with Kreiz reporting to Disney CFO Jay Rasulo.
Maker has more than 55,000 YouTube channels with a combined 380 million subscribers and consistently ranks among the top five YouTube partners, according to comScore.
The company has raised $66 million in venture capital funding in the last five years, including a $36 million round led by Time Warner Investments.
Recently, it has made several moves that indicate it's looking to expand beyond its YouTube roots, including acquiring startup video network Blip in September and partnering with celebrities to develop original content.