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Icahn Ends Tender Offer, Controls Nearly 34% of Lionsgate

1 Jul, 2010 By: Erik Gruenwedel

Carl Icahn

Activist investor Carl Icahn has formally ended his $7 per share tender offer for outstanding shares of Lionsgate, leaving him with 33.9% ownership and a political stalemate with senior management of the Santa Monica, Calif.-based mini-major.

New York-based Icahn said an additional 2,433,074 shares (2.1%) were tendered by the end of the offer at the close of the market June 30. Lionsgate said more than 66% of shareholders rejected Icahn’s offer, underscoring approval of its business strategy, which includes reported interest in acquiring significant catalog from Metro-Goldwyn-Mayer (MGM).

“Shareholders have repeatedly confirmed their support for the board and management's strategy to grow shareholder value by continuously rejecting the Icahn Group’s financially inadequate offer,” the studio said in a statement.

Brian Shipman, analyst with Jeffries & Co. in New York, disagreed, saying that without Icahn’s support and the probability of continued hostilities between the investor and senior management, he was downgrading Lionsgate shares to “hold” from “buy.”

“Absent Icahn's tender offer we see more downside risk to the share price, and only marginal upside if his offer were to be raised,” Shipman wrote in a note.

Indeed, Icahn has argued that without his tender offer, Lionsgate shares will eventually fall back below $5 per share when he began acquiring shares. Analyst David Miller with Caris & Co. in Los Angeles has stated that a fair price for Lionsgate is around $9 per share.

Lionsgate shares were up 25 cents to $7.23 per share in mid-morning trading.

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