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In the latest private equity buy-in to Hollywood, Apollo Funds has picked up a $760 million minority preferred stake in Dune producer Legendary Entertainment.
The investment follows LionTree LLC being tapped to explore possible merger or equity investment deals for Legendary, which is led by CEO Joshua Grode and develops, produces, distributes and finances major movie and TV projects across multiple platforms.
Following the investment by the Apollo Funds, Apollo partners Aaron Sobel and Lee Solomon will join the Legendary board of directors, along with representatives from Dalian Wanda Group, which acquired the production company in a $3.5 billion deal in 2016 amid a buying spree by China-based conglomerates.
“We are excited to welcome Apollo as a new shareholder in Legendary and equally important as a thought partner in our business,” Grode, who joined Legendary in 2017, stated. “This fund investment from Apollo validates our success to-date and invigorates our growth plans with a strategic capital partner who shares our goal to grow the business.”
Legendary management will continue to control the operational, creative and strategic direction of the producer, also known for movies like Godzilla vs. Kong and the upcoming titles Texas Chainsaw Massacre (Netflix) and Fresh (Searchlight).
Legendary was also involved in such hits as Godzilla, Inception, Jurassic World and Pacific Rim and is working with Warner Bros. on Dune: Part Two for an Oct. 20, 2023, release. The studio’s recent TV projects include Lost in Space (Netflix), Carnival Row (Amazon) and Pacific Rim: The Black (Netflix).
Sobel and Solomon added in their own statement: “Legendary is known for its world-class content and franchise features and has strong relationships with top studios and streaming platforms alike. In making this fund investment, we were excited by the velocity in their television and film business, the strong management team and the massive secular tailwinds driving the industry. Already, Legendary generates significant free cash flow that’s reinvested in high-growth categories, and we also see compelling M&A opportunities ahead.”
Apollo is the latest private equity player to place a bet on Hollywood since TPG took on a majority stake in CAA and Silver Lake became the largest external shareholder in Endeavor. More recently, production companies have been shopping stake sales to private equity firms.
LeBron James’ SpringHill sold a stake to RedBird Capital, while former Disney executives Tom Staggs and Kevin Mayer formed Candle Media with billions of dollars from Blackstone. Candle Media then went on a buying spree, picking up stakes in Cocomelon owner Moonbug Entertainment, Reese Witherspoon’s Hello Sunshine, Will Smith and Jada Pinkett-Smith’s Westbrook Media, and Fauda producer Faraway Road.
Apollo was attracted by Legendary’s premium content and distribution pipelines and potential synergies with its private equity portfolio. Together with Legendary’s management team, Apollo also sees strong potential M&A opportunities for the company across a host of media and talent categories, the private equity player added.
LionTree served as financial advisor for the Apollo Funds in the transaction. Moelis & Company served as lead financial advisor to Legendary, and Paul Weiss and Stroock served as legal counsel.
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