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Icahn Seeks 30% Stake in Lionsgate

16 Feb, 2010 By: Erik Gruenwedel

Billionaire activist investor Carl Icahn Feb. 16 is seeking to up his ownership stake in Lionsgate to 29.9% from 19% after tendering an offer to pay $6 per share for nearly 13.2 million common shares — a 14.7% premium on the studio’s Monday closing stock price.

Analysts contend New York-based Icahn’s actions are typical of his operational style, which both supports current management while at the same time turning the screws on them.

Icahn, who recently vacated his board seat with Blockbuster, purchased stock in the Santa Monica, Calif.-based Lionsgate last spring and summer, while at the same time waging a fiscal public battle to exert greater influence.

If the investor increased his ownership stake above 20%, it could force expedited repayment of a credit facility and hinder Lionsgate’s ability to acquire third-party catalog, notably from Miramax and MGM, reported The Los Angeles Times.

Lionsgate, in a statement, said that consistent with its fiduciary duties and in consultation with its financial and legal advisors, its board would review Icahn's proposal and make its recommendation to shareholders promptly.

The studio reported a loss of $65.5 million in the third quarter (ended Dec. 31), despite the home entertainment segment delivering record revenue from its catalog.

David Miller, analyst with Caris & Co. in Los Angeles, believes ongoing scuttlebutt regarding tensions between the investor and Lionsgate is grist for the media.

“That’s what the media wants to write about,” Miller said last year. “It’s the sexy story.”

Lionsgate shares rose 7% to $5.57 per share in midday trading.

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