Lionsgate Acknowledges It’s Talking to Icahn

Company’s SEC filing indicates they’re trying to reach a settlement

Last Updated: May 17, 2010 @ 11:39 PM

Lionsgate Entertainment confirmed Monday that it is in discussions with its activist investor Carl Icahn in an effort to end their ongoing battle over the future of the company.

A filing with the Securities and Exchange Commission acknowledged, as TheWrap reported Friday, that Lions Gate is in discussions with Icahn about a settlement.

Lionsgate has been trying to fend off Icahn’s $7-a-share tender offer, which he recently extended until Friday, May 21.

Shareholders voted last week to approve Lionsgate’s "poison pill" defense against Icahn’s takeover offer, even though a Canadian court earlier ruled the company can’t actually use the poison pill.

In the SEC filing, Lionsgate said, “The Board continues to believe that the Offer to purchase up to all of the common shares of Lionsgate for U.S.$7.00 per share is financially inadequate, opportunistic and coercive, and is not in the best interests of Lionsgate, its shareholders or other stakeholders."

The filing continues: "The Icahn Group has recently communicated to Lionsgate certain of its views with respect to its relationship with the Company. As previously disclosed, Lionsgate has had discussions with the Icahn Group at various times since October 2008. To date, those discussions have not resulted in an agreement between Lionsgate and the Icahn Group, and there can be no assurance that any negotiations will ensue or result in an alternative to the Offer."

However, it adds, "The Board believes that it would now be appropriate to respond to the Icahn Group’s recent communications to determine whether there may be a basis on which to engage in negotiations and will do so today.”

Also in the filing, Lionsgate said it was establishing a fund to pay its top executives if they are ousted by Icahn. It said it is setting up a trust containing $16 million to pay CEO Jon Feltheimer, vice chairman Michael Burns and three other top executives "should their employment be terminated without ’cause’ in connection with a ‘change in control.’"