Lionsgate Rejects Icahn’s $78.9M Bid

Board says investor group lacks experience; “partial” offer “coercive” to current shareholders

Last Updated: March 12, 2010 @ 4:13 PM

Lionsgate announced on Friday that its board had rejected a bid by activist investor and noted corporate raider Carl Icahn to buy a large stake in the company.

The studio’s board of directors voted unanimously against the unsolicited offer, calling it “financially inadequate,” “coercive” and “not in the best interests of Lionsgate and its shareholders and other stakeholders.” The Icahn Group had offered to purchase up to 13,164,420 common shares — about 30 percent of Lionsgate — for $6.00 per share, or $79,986,520.

Lionsgate warned that the deal would effectively give Icahn control of the studio.

“The purchase price offered by the Icahn Group represents an effort to acquire control of Lionsgate without paying a control premium,” Lionsgate said in a statement. “If the offer is successfully completed, the Icahn Group would acquire the ability, without having paid an appropriate control premium, to effectively control a range of significant decisions that may be made by Lionsgate, without paying an appropriate control premium.  In effect, the Icahn Group is seeking to acquire control of Lionsgate for a total offer price of less than $80 million.”

Lionsgate said Icahn’s offer was 28.5 percent less than what Wall Street analysts have said its shares are worth. Shares of Lionsgate stock were trading at $5.73 Friday morning, up about 1 percent.

“The Icahn Group has limited experience in operating a business in Lionsgate’s industry,” the studio said.  “Despite this, the Icahn Group is seeking a greater opportunity to participate in decisions regarding major acquisitions and other matters that would affect shareholders.”

Lionsgate called Icahn’s “partial bid” is “inherently coercive to other shareholders.”  The offer “forces shareholders to decide whether to accept the offer, reject the offer, sell into the market or maintain their position, without knowing the extent to which other shareholders will accept the offer or the price at which the shares will trade after the offer, the role that the Icahn Group would play following the offer and the impact of that role on the value of the shares.”

"We have built the Company piece by piece over the past 10 years through a patient, consistent and disciplined approach to both internal growth and external acquisitions," Lionsgate CEO Jon Feltheimer told investors. "We are confident we can better serve our shareholders by continuing to execute our strategic business plan, and the acquisition of effective control by the Icahn Group would significantly jeopardize that plan."

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