After a short-lived association India’s Eros STX Global Corporation (ESGC) has signed a “definitive agreement” for a $173m sale of Robert Simonds’s STX Entertainment to The Najafi Companies, a US-based private investment company with holdings in media, tech and sports.
A transaction is expected to close by the end of January 2022 subject to customary closing conditions. Under the terms of the deal Eros has a 45-day “go-shop” period in which it can solicit alternative proposals from other potential buyers.
Should the deal with Najafi end, ESGC would pay a $4.5m termination fee and return a $2m deposit to Najafi. Under specified circumstances should Najafi fail to close the transaction it would pay a $4.5m fee less the deposit.
Simonds founded STX in 2014 and after his efforts to take STX public on the Hong Kong Stock Exchange in 2018 collapsed, Eros and STX merged in 2020 to form Eros STX Global Corporation in a deal that would enable Eros to bolster its Eros Now streaming platform with STX’s Hollywood titles.
Theatrical hits were thin on the ground. STX’s first big score was 2016 comedy Bad Moms, which earned $184m at the worldwide box office including $113m from North America. Hustlers opened in 2019 and grossed $157m globally and $105m in North America. Amy Schumer rom-com I Feel Pretty took around $94m worldwide in a roughly even North America-international split. Many of the company’s releases failed to catch on. One notable bomb was 2019 release Uglydolls which STX touted for years prior to release. It struggled at the box office and finished on $32m worldwide, taking just over $20m in North America.
The $173m purchase price would see Najafi acquire STX Entertainment through the purchase of all issued and outstanding shares of common stock of a parent entity of STX and wholly owned ESGC subsidiary. The purchase price includes repayment of $148m in debt owed by STX Entertainment. Najafi has partnered exclusively with The Forest Road Company as its lender, who is expected to repay STX Entertainment’s debt and provide it with working capital going forward.
Lazard is serving as financial adviser to ESGC and Kirkland & Ellis LLP and Gibson, Dunn & Crutcher LLP are serving as its legal advisers. Ballard Spahr LLP is serving as legal adviser to The Najafi Companies.
The Najafi Companies is based in Phoenix with offices in Los Angeles and New York and was founded by Jahm Najafi in 2002.
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