MSG Entertainment to Buy MSG Networks in Dolan Recombination

MSG Networks fell after it agreed to be acquired by MSG Entertainment, a recombination of two Dolan-family-controlled companies.
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MSG Networks  (MSGN) - Get Report shares fell after the company agreed to be acquired by Madison Square Garden Entertainment MSGE, a recombination of two Dolan-family-controlled companies.

MSG Networks owns MSG TV network, which shows games of New York sports teams in football, basketball, hockey and soccer.

MSG Entertainment owns prominent sports and concert venues, including Madison Square Garden and Radio City Music Hall.

The other piece of the Dolan puzzle is Madison Square Garden Sports MSGS, which owns the National Basketball Association's New York Knicks and the National Hockey League's New York Rangers.

MSG Networks recently traded at $17.16, down 1.3%, and MSG Entertainment was at $97.68, up 4%. Less than two weeks ago MSG Networks touched a 52-week high $20.90.

As for the acquisition, it’s an all-stock transaction at a fixed exchange ratio.

The terms call for MSG Networks holders to receive 0.172 share of MSG Entertainment Class A or Class B for each of their shares of MSG Networks Class A or Class B, the companies said.

“The exchange ratio is approximately 4% above the ratio of the unaffected closing stock prices of the two companies on March 10, the last trading day before a press report speculated on a potential transaction,” they said.

The merger is expected to be tax-free for both MSG Entertainment and MSG Networks and their stockholders.

“The combined company would have a stronger liquidity position to support its live entertainment business, which following the shutdown of its venues due to the pandemic is now on a path back to normal operations,” the companies said.