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Icahn Ups Bid for Lionsgate 15%

1 Sep, 2010 By: Erik Gruenwedel

Activist investor Carl Icahn isn’t going away. In fact, the largest individual holder of Lionsgate shares late Aug. 31 upped his hostile bid for the Santa Monica, Calif.-based mini-major $1 to $7.50 per share.

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 15% increase for all outstanding common shares is predicated on a positive outcome of a separate lawsuit Icahn filed against Lionsgate in July, according to a regulatory filing. Specifically, Icahn alleges the studio 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 overperform on TV DVD.

Lionsgate said it would review Icahn’s latest offer.

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