After a brief moment of celebration, Lions Gate has lost its appeal of a ruling invalidating its "poison pill" takeover defense.
Initially things looked good on Friday morning, when the British Columbia Court of Appeals granted Lions Gate Entertainment Corp. permission to appeal the invalidation of its "poison pill" takeover defense.
However, that meant the appeal would be heard immediately, and the court turned down the appeal, ultimately letting stand the invalidation of the poison pill defense.
Lions Gate is trying to fend off billionaire investor Carl Icahn, who has mounted a $7-per-share hostile takeover bid.
The British Columbia Securities Commission on April 27 issued a decision disallowing the poison pill, a plan that would need shareholder approval to take effect. Lions Gate had been urging its shareholders to approve that plan, which would have allowed shareholders to buy stock at a discount, blocking Icahn’s takeover attempt.
Also on Friday, Reuters said, the Securities Commission gave its reason for its decision to invalidate the poison pill, saying the plan would result in shareholders being deprived of the ability to respond to Icahn’s offer.
Lions Gate still has the option of appealing the latest decision, rendered by a panel of three judges, to the Supreme Court of Canada, according to a court spokesperson. However, the spokesperson said the timeline made that unlikely.
Lions Gate issued the following statement on Friday:
"Lionsgate disagrees with the BCCA’s decision to decline to interfere with the BCSC’s cease trade order of Lionsgate’s Shareholder Rights Plan. Lionsgate believes that its shareholders’ right to vote and to determine for themselves whether the Shareholder Rights Plan is in their interests is paramount. Any decision on the Shareholder Rights Plan should have been withheld until the BCSC had an opportunity to review the results of Lionsgate shareholders’ vote on the Shareholder Rights Plan that will take place at the May 12, 2010, Special Meeting of Shareholders.
"The Board continues to recommend that shareholders vote FOR the approval of the Shareholder Rights Plan at the Special Meeting of Shareholders that remains scheduled for May 12, 2010 at 10:00 a.m. ET, in order to protect their investment moving forward. The company continues to evaluate all of its alternatives with regard to the BCSC’s decision.
"The Board emphasizes that if the Icahn Group acquires as little as 1.26% of Lionsgate shares, it can cause an event of default under Lionsgate’s credit facilities, which would be materially adverse to Lionsgate’s business. The Board recommends that shareholders reject the Icahn Group’s offer by not tendering their shares or withdrawing any shares previously tendered into the Icahn Group’s offer."