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Icahn Extends Lionsgate Tender Offer

22 Oct, 2010 By: Erik Gruenwedel

Activist investor Carl Icahn Oct. 22 extended his $7.50 per share tender offer to Lionsgate common shareholders until Nov. 1.

The offer, which has been rejected as insufficient by Lionsgate’s board, was moved back to allow shareholders of famed studio Metro-Goldwyn-Mayer Inc. to vote Oct. 29 on a buyout offer by minority holder Spyglass Entertainment.

In a twist, Icahn and Lionsgate are cooperating efforts to persuade MGM shareholders to accept a separate proposal that would have Lionsgate merging with MGM.

Icahn’s offer for Lionsgate is also predicated on a successful outcome in ongoing litigation between the New York investor and Santa Monica, Calif.-based mini-major in Canada.

Icahn, who has a history of investing in companies and then taking on management, has doggedly attempted to wrest control of Lionsgate through stock purchases and unsuccessfully placing representatives, including his son, on the studio’s board.

The billionaire investor’s lawsuit alleges Lionsgate entered into an illegal transaction with its second-largest shareholder in an effort to dilute his stake in the company from 39% to 33.5%.

Previous efforts by Icahn to acquire outstanding shares have been characterized as financially insufficient by Lionsgate’s board and ultimately rebuffed by shareholders.

Indeed, David Miller, analyst with Caris & Co. in Los Angeles, has long stated that Lionsgate is worth about $9 per share.

Despite losing more than $64 million in its most recent financial period largely due to theatrical misses, Lionsgate delivered a home entertainment hit with Kick-Ass. August was an unqualified success for the studio following box office hits The Expendables and The Last Exorcism, and a third-consecutive Emmy for best drama for "Mad Men," which continues to over-perform on TV DVD.


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