Leone Film Group, run by Sergio Leone's children Andrea and Raffaella, is preparing for a major investment deal or merger that it hopes will be the next step in the company's evolution.
In the race to consolidate European media across borders, the company is hoping to expand its footprint in Southern Europe with the help of a larger partner, according to sources. Ahead of a possible deal, management is planning to sell more stock to select investors at a premium price and eyeing a move of its stock listing to a bigger stock exchange in hopes of attracting a bigger price tag.
Despite business success, insiders say the company's market value has remained below internal expectations. The company's stock currently trades at 3.7 euros or $3.97, on the AIM Italia exchange, which has a reputation for being less liquid than other markets and has been nicknamed "the morgue" by some investors critical of it.
Because AIM is younger and sees less public activity, and the Leones have maintained tight control over the company, currently less than 20 percent of shares are openly traded. The company has been working on expanding its stock float.
In fact, Leone Film Group has quietly struck a deal to sell a further 6 percent stake over the next 24 to 48 hours to a select group of high-profile Milan investors at a premium price of 4.3 euros a share, or $4.60, according to a source who is advising on the deal. That shows investors' believe the company is worth more than its stock price implies.
Once the company increases the percentage of its publicly traded shares to 26 percent via the sale, it also plans to immediately apply to move its stock listing to Milan's main exchange, the Borsa Italiana, sources say. The idea: once its shares are more widely traded, its stock price should increase, making the company more valuable if it strikes a deal with a big media company.
In a similar move in September, Maite Bulgari, wife of Paolo Bulgari, chairman of the luxury jewelry company, bought a 10.6 percent stake in the company for $6.73 million (6 million euros), valuing each share at a premium of 4 euros.
While a deal with France is off the table - especially after Vivendi's failed Mediaset merger - the company is eyeing a small group of possible partners. In an ideal scenario, Leone Film Group is hoping to be acquired by a larger European player and then to lead that company's charge through Southern Europe.
Founded in 1989, Leone Group has in the last few years established itself as a leading production and distribution company in Italy. It has inked deals with local co-producers and distributors and signed international deals with the likes of DreamWorks, Lionsgate and The Weinstein Company, bringing Oscar favorites like La La Land and Hacksaw Ridge to Italy.
The company is also expanding its television production arm, with TV series in the works from Academy Award winner Giuseppe Tornatore (Cinema Paradiso) and Stefano Sollima (Gomorrah). And they're helping lure big Hollywood productions to Italy by serving as local co-producers, with Steven Spielberg's The Kidnapping of Edgardo Mortara first up with a summer production slated.