Cuban, Icahn Play Cat-and-Mouse With Lionsgate

But why would the investor sell to Icahn for less than he can get on the open market?

Last Updated: June 14, 2010 @ 7:42 AM

Hollywood and Wall Street were both watching with curiosity as Mark Cuban announced  he would sell his 5 percent of Lionsgate to takeover king Carl Icahn.

There’s another game afoot, and it’s not merely about selling shares.

Something doesn’t quite add up here. Lionsgate shares were selling for $7.37 as recently as June 3

So why would Cuban be willing to sell his significant chunk to Icahn for less than he can get in the marketplace? For every nickel over $7, his 6.4 million shares increase in value by $300,000. Even to Cuban, that’s real money.

Things got even more curious on Thursday as the day wore on. Cuban announced on CNBC his intention to tender his shares to Icahn.

But my Icahn sources say that Cuban has not been in touch. (He has until the date of the tender, June 16, to formally join.)

Meanwhile Lionsgate dangled a carrot in front of Cuban all day, saying he would be underselling his shares if he sold to Icahn.

The message: They want to give him a better offer.

But again, I’m told by that Cuban hasn’t called Lionsgate. For what it’s worth, he didn’t answer my emails either.

So what gives? Perhaps Cuban is trying to play Icahn off Lionsgate, letting both sides sweat, to get the maximum price for his shares.

Or he has some other game in mind completely. Could there be a side deal going on? Could he get Carl Icahn to agree to buy HDNet, or his other stake in Landmark Theaters in exchange for offering up Lionsgate? (Most people think Cuban wants out of HDNet, at least.)

The larger game is even more obscure: Icahn has pronounced for more than a year that he wants to buy the independent studio. But he keeps lowballing the shares, offering first $6, then $7, only to be rejected.

Inside Lionsgate, everyone seems to know this is some kind of game for the billionaire. Management has been talking to Icahn for months in an attempt to mollify the activist shareholder, and has figured out that he likes the cat and mouse.

Icahn currently owns 19 percent of the stock. He wants a seat on the board – an entirely reasonable demand.

But when management has offered him (or, rather, his son Brett) a seat, Icahn has come back with more demands. His board seat has to have “superpowers” that would give him more control, such as access to the company’s green-light committee.

So far, that’s a non-starter. No, Carl, you don’t get to pick the films.

So why else offer just $7 for stock that’s already trading consistently at that price?

Because he likes the game.

“He’ll torture us forever,” said one person at Lionsgate, who by now is in a position to know. 

Previously: Mark Cuban Tendering Lionsgate Shares to Icahn