AMC Networks Finalizes $65M Deal to Acquire Robert Johnson’s RLJ Entertainment

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AMC Networks CEO Josh Sapan

Johnson and affiliates will retain a 17 percent stake in the company behind Acorn TV and the Urban Movie Channel after the cable networks firm completes the transaction, which values RLJ at $274 million.

AMC Networks said Monday morning that it has finalized a deal to acquire control of Robert Johnson's RLJ Entertainment in a going-private deal.

Johnson and his affiliates will retain a 17 percent stake. AMC Networks, which already owns a 30.1 percent stake in RLJ and warrants that convert to give it a stake of 50.1 percent, will pay $65 million in the deal, which puts an aggregate enterprise value of approximately $274 million on RLJ, according to the companies.

The price tag amounts to $6.25 per share, a premium of 61 percent to the closing price of the stock right before AMC Networks' original bid in late February. Back then, the firm proposed paying $4.25 per share in cash for the premium digital channel company.

AMC Networks in November 2016 made a $65 million investment in the firm in the form of loans via its unit Digital Entertainment Holdings for a 26 percent minority stake, with an option to purchase outright control.

Pursuant to the merger agreement, "AMC Networks will pay, in cash, an aggregate of approximately $65 million to holders of RLJ Entertainment’s outstanding common stock, preferred stock and warrants not currently owned by AMC Networks, Robert L. Johnson and their respective affiliates," the companies said. "Upon completion of the merger, RLJ Entertainment will become an indirect subsidiary of AMC Networks, with Mr. Johnson and his affiliates owning a stake of 17 percent."

The companies said they expect the deal to close in the fourth quarter. RLJ said in mid-June that its subscription video services Acorn TV and UMC (Urban Movie Channel) have seen their combined subscribers surpassing 800,000, an increase of 45 percent from a year earlier.

Said Josh Sapan, president and CEO of AMC Networks: “Bob Johnson is a legend for good reasons that we are the beneficiaries of. His management team is extraordinary, having successfully transitioned Acorn TV from a home video and DVD business to a leading direct-to-consumer subscription service, and growing both Acorn TV and UMC in a competitive environment, by offering excellent, sought-after content and creating strong brands. In addition, RLJ Entertainment’s majority stake in the Agatha Christie library — a content brand which remains one of the most popular and venerable — provides AMC Networks with valuable IP opportunities.”

Added Sapan: “This acquisition furthers AMC Networks’ digital strategy by meaningfully accelerating our interests in direct-to-consumer ad-free subscription services that we own and control, in addition to providing us with access to strong IP as we continue to diversify our revenue opportunities, placing AMC Networks in a stronger position over the long term.”

Johnson, RLJ's founder and chairman, said: “I fully support AMC Networks’ acquisition of RLJ Entertainment. I commend the Special Committee for negotiating the transaction for our public stockholders.”

More to come.