MSG Networks stock falls after deal to be bought by MSG Entertainment at a discount

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Shares of MSG Networks Inc.
MSGN,
-7.59%

fell 2.1% in premarket trading Friday, after the sports media company announced an agreement to be acquired by Madison Square Garden Entertainment Corp.
MSGE,
-9.87%

in a stock deal that values MSG Networks at about $921.8 million. Under terms of the deal, MSG Networks shareholders will receive 0.172 MSG Entertainment shares for each MSG Networks shares they own. Based on Thursday’s stock closing prices, that values MSG Networks stock at $16.16 each, representing a 7.0% discount. The companies said the exchange ratio represents a 4% premium to the “unaffected” closing price for MSG Networks on March 10. “With the acquisition of MSG Networks, MSG Entertainment anticipates it would capture more of the emerging revenue opportunity related to the potential expansion of legalized sports gaming in its market,” the companies said in a statement. “The combination of the companies’ media, digital and venue assets creates a powerful platform for potential sports gaming partners, which is expected to generate significant incremental revenue in the years ahead.” MSG Networks stock has run up 27.9% over the past three months through Thursday and MSG Entertainment shares have gained 6.5%, while the S&P 500
SPX,
+1.66%

has tacked on 5.6%.

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