Madison Square Garden Entertainment Corp. (NYSE:MSGE) reached a definitive agreement to acquire MSG Networks Inc. (NYSE:MSGN) for approximately $920 million on March 25, 2021. MSG Entertainment will acquire MSG Networks in an all-stock, fixed exchange ratio transaction. Upon the closing of the transaction, MSG Networks stockholders would receive 0.172 shares of MSG Entertainment Class A or Class B common stock for each share of MSG Networks Class A or Class B common stock they own. MSG Networks will be required to pay MSG Entertainment a termination fee of $18,900,000 or MSG Entertainment will be required to pay MSG Networks a termination fee of $21,200,000, respectively. Upon the closing of the transaction, a current director of MSG Networks elected by the holders of its Class A common stock would be appointed as a director of MSG Entertainment and Dolan would no longer serve on the MSG Networks Inc. Board of Directors. As of March 29, 2021, Clients of Boyar Asset management, who own shares of MSG Networks and Madison Square, objects to MSG Entertainment's takeover offer of MSG Networks as they seem price to be undervalued. They currently value MSG Networks at 9.0x our estimated 2022 EBITDA projection, an amount view as extremely conservative and which yields an intrinsic value of approximately $25 per share. Andrew Lustgarten will continue to serve as President of MSG Entertainment, and Andrea Greenberg will join MSG Entertainment and serve as President and Chief Executive Officer of MSG Networks – both reporting to MSG Entertainment Executive Chairman and Chief Executive Officer, James Dolan.

The transaction is subject to approval by most of the combined voting power of the outstanding shares of MSG Networks Class A common stock and Class B common stock. MSG Entertainment's issuance of its common stock in the transaction is subject to approval by a majority of the combined voting power of the votes cast by the holders of shares of MSG Entertainment Class A common stock and Class B common stock and, separately, the issuance of MSG Entertainment Class B shares must be approved by the holders of not less than 66 2/3% of the voting power of the outstanding shares of MSG Entertainment Class B common stock. The Special Committee of the Board of Directors of MSG Networks, and the full board, based on the recommendation of the MSG Networks Special Committee, have each recommended that MSG Networks stockholders adopt the merger agreement. The Special Committee of the Board of Directors of MSG Entertainment, and the full Board, based on the recommendation of the MSG Entertainment Special Committee, have each recommended that MSG Entertainment stockholders approve the issuance of MSG Entertainment common stock required for the transaction. The holders of all of the outstanding shares of MSG Networks Class B common stock and MSG Entertainment Class B common stock, who have sufficient votes to approve the transaction, have entered into voting agreements pursuant to which they have agreed to vote all of the MSG Networks Class B common stock and MSG Entertainment Class B common stock in favor of the adoption of the merger agreement and the issuance of MSG Entertainment common stock required for the transaction, respectively. the transaction is subject to the listing on the New York Stock Exchange of the MSGE Class A Common Stock issuable as Class A Merger Consideration; receipt of certain governmental and other approvals, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; the absence of any law or order prohibiting the consummation of the Merger; the effectiveness of the registration statement on Form S-4 to register the MSGE Class A Common Stock to be issued as Class A Merger Consideration in the Merger; the accuracy of the representation and warranties of the parties; each party's performance in all material respects of its obligations contained in the Merger Agreement; the absence of any material adverse effect on MSG Entertainment or MSG Networks since the date of the Merger Agreement; and the receipt by each party from the other party of a required tax representation letter to the extent required by the Merger Agreement. The definitive agreement was exclusively negotiated and unanimously approved by Special Committees of MSG Entertainment's and MSG Networks' boards, both of which are comprised entirely of independent directors. The agreement was also unanimously approved by the Boards of Directors of both MSG Entertainment and MSG Networks. MSG Entertainment and MSG Networks shareholders will hold respective meetings on July 8, 2021 to approve the transaction. The transaction, which is also subject to customary closing conditions, is expected to be completed during the third quarter of calendar 2021. The merger is expected to be tax-free for both MSG Entertainment and MSG Networks and their stockholders.

Navid Mahmoodzadegan, Andrew Haber, Carlos Jimenez and Dan Lee of Moelis & Company LLC and Raine Securities LLC are serving as independent financial advisors and provided fairness opinion and David E. Shapiro, Gordon S. Moodie, Joshua Holmes, Michael Schobel and John Sobolewski of Wachtell, Lipton, Rosen & Katz is serving as independent legal counsel to the Special Committee of the Board of Directors of MSG Entertainment. LionTree Advisors LLC and Morgan Stanley & Co. LLC are serving as independent financial advisors as well as also provided fairness opinion and George R. Bason Jr., Marc O. Williams, Ethan R. Goldman, Veronica M. Wissel, Arthur J. Burke and Susan D. Kennedy of Davis Polk & Wardwell LLP is serving as independent legal counsels to the Special Committee of the Board of Directors of MSG Networks. Michael Diz of Debevoise & Plimpton LLP is serving as legal counsel to the Dolan family. Jeffrey D. Marell and Scott P. Grader of Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal advisors to Moelis & Company LLC. David Kurzweil of Latham & Watkins LLP acted as legal advisor to Morgan Stanley & Co. LLC and LionTree Advisors, LLC. Frank Aquila and Robert W. Downes of Sullivan & Cromwell LLP acted as legal advisor to Madison Square Garden Entertainment Corp. (U.S.). PJT Partners, LP acted as financial advisor to Madison Square Garden Entertainment Corp. D.F. King & Co., Inc. acted as proxy solicitor and EQ Shareowner Services acted as transfer agent to MSG Entertainment and will be entitled to fee of $20000. Raine is entitled for a transaction fee, including a fee equal to $1.5 million that became payable on the date of the engagement letter, a fee equal to $2.5 million that became payable upon the delivery of the fairness opinion to the MSGE special committee, and a fee equal to $3.5 million that will become payable in the event that MSG Entertainment consummates the merger. Moelis received a retainer fee of $1.5 million which shall be 100% creditable against its transaction fee. Moelis will also receive a transaction fee of $5 million for its services contingent upon the consummation of the merger. Moelis also became entitled to receive and has received an additional fee of $2.5 million upon the delivery of Moelis' opinion. As compensation for its services, MSG Networks, on behalf of the MSGN special committee, has agreed to pay Morgan Stanley a fee of approximately $7.6 million and has agreed to pay LionTree a fee of approximately $4.5 million. MSG Networks has also retained D.F. King to assist in the solicitation process for a fee estimated not to exceed $20,000. The Goldman Sachs Group, Inc. (NYSE:GS) and JPMorgan Chase & Co. (NYSE:JPM) acted as financial advisors for Madison Square Garden Entertainment. Guggenheim Securities, LLC acted as financial advisor for MSG Networks.

Madison Square Garden Entertainment Corp. (NYSE:MSGE) completed the acquisition of MSG Networks Inc. (NYSE:MSGN) on July 9, 2021.