On the heels of a rejection of his takeover offer, Lionsgate and activist shareholder Carl Icahn have entered into a public and very personal sparring match over the management of the company -- and who is failing at what.
On Wednesday, Icahn sharply criticized Lionsgate CEO Jon Feltheimer for presiding over a steep fall in stock price since 2004, and challenging his abilities: "I cannot help but wonder why your "vision" -- if so 'meaningful' -- never translated into shareholder value," he wrote.
He added: "If the stock price of a company remains stagnant for years, as it has with Lions Gate, then clearly something is wrong. I suggest that your directors have failed shareholders. They have never taken a long, hard look at this 'meaningful vision' you claim to possess and have not been willing to hold you accountable for it."
Lionsgate, which earlier this week rejected Icahn's bid to take over the company for a lowball offer of $6 a share, was quick to respond, issuing a statement that thumbed its nose at the once-upon-a-takover king.
"Mr. Icahn is simply attempting to distract shareholders from the obvious -- his offer price is woefully inadequate," the letter scolded. "Contrary to Mr. Icahn’s statement, Lionsgate’s Board and management team are focused on leading the Company and are committed to building value for all of our shareholders."
Here is Icahn's full letter, followed by Lionsgate full statement:
Dear Jon,
I found several aspects of your statement yesterday of great concern. To say that you have exhibited a "patient, disciplined strategy of building a strong and diversified company step by step over the past 10 years" is absurd. In actuality, most of the stock's appreciation during the decade was the result of one transaction the acquisition of Artisan. In the press release announcing that acquisition, Artisan CEO Amir Malin stated, "We enter 2004 with our strongest theatrical slate ever." After the acquisition, Lions Gate's stock reached a high of $11.40 on November 10, 2004. But when the pipeline acquired from Artisan ran out, for several years the stock went nowhere, and then in September of 2008 it began its precipitous decline to a low of $4.85 on February 4, 2010. I believe the stock would have continued declining if I had not acquired 1,236,938 shares between February 5, 2010 and February 11, 2010 and then announced a tender offer on February 16, 2010. You claim that I offer no "meaningful vision", thereby implying that you have one. I cannot help but wonder why your "vision" - if so "meaningful" - never translated into shareholder value?
I believe that one of my strongest traits as an investor is that I don't personally claim to be a visionary in regard to any particular industry. I believe in finding strong managers and holding them accountable. If the stock price of a company remains stagnant for years, as it has with Lions Gate, then clearly something is wrong. I suggest that your directors have failed shareholders. They have never taken a long hard look at this "meaningful vision" you claim to possess and have not been willing to hold you accountable for it.
