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Icahn Initiates Second Tender Offer for Lionsgate Shares

20 Jul, 2010 By: Erik Gruenwedel

Carl Icahn

Activist shareholder Carl Icahn July 20 commenced with a second tender offer for all outstanding shares of Lionsgate priced at $6.50 per share – 50 cents less than a previous offer.

The offer, which ends Aug. 25, came the day after the conclusion of a 10-day détente between New York-based Icahn and Santa Monica, Calif.-based Lionsgate. The two sides had agreed to the truce in an effort to explore possible merger and acquisition opportunities. While certain discussions regarding acquisition opportunities continue, Icahn, in a statement, said there were no immediate opportunities that merited extension of the 10-day standstill period.

The investor, who holds nearly 38% of Lionsgate’s stock, said he intends to replace the “lion’s share” of the mini-major’s board with his nominees at the September shareholder meeting. In addition, Icahn said provisions of Lionsgate’s loan agreements could call for the expedited payment of more than $500 million should a third party assume more than 50% ownership stake.

Icahn, who has been warring with Lionsgate’s management for years, believes that without his interest the studio’s stock would fall. Analysts contend that without his support the probability of continued hostilities between the investor and senior management will continue.

Lionsgate, in a statement, said its board would review the unsolicited offer.

Shares of Lionsgate were up 39 cents at $6.42 per share in mid-morning trading.

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