Barring a miracle, Carl Icahn will lose his bid to pad the Lionsgate board with loyalists on Tuesday.
In fact, he’ll lose badly.
“Icahn’s slate will be soundly defeated," Richard Dorfman, managing director of the investment firm Richard Alan Inc., told TheWrap. "And that means he’ll have no choice but to go back to the drawing room.”
There, he could decide to up his tender offer to as much as $9 -- a bold stroke that could turn the tide. But for now, he's been checked.
Indeed, Icahn seemed to acknowledge that his play for the Vancouver-based studio might have hit an impasse. On the heels of a New York court decision that denied his move to strip voting shares from a rival stakeholder, Icahn admitted that he wouldn’t have enough support to install his slate of rebel nominees on Lionsgate’s board.
“We recognize that it is now virtually impossible for us to prevail in the proxy contest due to the dilutive transaction in question. Nevertheless, we encourage shareholders to voice their dissatisfaction by voting for our slate of nominees,” Icahn said in a statement Monday.
A spokesperson for Icahn declined to comment and Lionsgate did not immediately respond to TheWrap's request.
Icahn's decision to allow his latest tender offer to expire on Monday was a tacit admission that his year-long quest to take over Lionsgate had been dealt a potentially devastating setback. The best he can hope for is that one or two of his five-person slate will get elected. Ironically, Icahn could have achieved that outcome anyway based on his large stake in the company -- and spared himself the costly legal fight.
“This is a man with strongly held views about how the company should be run, but it all became so public. It feels like there was so much posturing that it became difficult to end it without admitting fault. Now that Icahn may have lost the proxy battle, both sides can go back to their corners and the thing can resolve itself without either party having to admit they’re wrong,” says David Bank, an analyst with RBC Capital.
If Icahn still wants the Lionsgate prize, the investor may be forced to up his tender offer from $7.50 to between $8 to $9, some analysts predict.
“Management would be hard-pressed to ignore or reject an offer in that range,” Dorfman said.
Still, Icahn's willingness to go that high might enable him to prevail in his takeover bid. However, in doing so he would be single-handedly adding tens of millions of dollars to the studio’s price tag. Icahn could always liquidate his holdings, but that would likely mean he would take a very cold cash bath.
“It will be very difficult for him to unwind his position and take his marbles and walk away,” Dorfman said. “What he may do is wait six months and see if the studio can turn it around.
