NEW YORK — Is Lionsgate really in play?
The publicly traded company has been considered a juicy takeover target on and off for years, and rumors have escalated of late as the studio biz saw a period of unprecedented consolidation. MGM, DreamWorks and Pixar were all acquired by deep-pocketed media congloms.
Now, corporate raider Carl Icahn has revealed that he’s amassed a hefty 4% stake in Lionsgate.
While that alone doesn’t a deal make, Icahn buys stocks to turn a profit. Nothing boosts shares faster or higher than the possibility of a takeover — or, even better, a bidding war.
Lionsgate shares nosed higher last week, in part as reports of Icahn’s newfound interest in the company trickled out.
A Lionsgate spokesman said, “As a matter of corporate policy, we don’t discuss our shareholders.”
But a person familiar with the company’s thinking said he believes Icahn may simply see lots of potential upside in the stock, given Lionsgate’s strategic position as a major owner and creator of content in a world where distribution outlets are proliferating.
In a filing earlier this month with the Securities and Exchange Commission, Icahn’s Icahn Management said that it had acquired nearly 4% of Lionsgate. The holding was listed among the firm’s many other investments, which range from retailers to oil companies.
In his most recent forays into the showbiz space, Icahn tried to split up Time Warner and push through a merger of Blockbuster and rival Hollywood Video. He failed on both counts.
But Icahn’s got a powerful ability to make headlines and to tap into a company’s key issues and shareholder gripes. And he’s worth $8 billion. The question is, does Icahn think Lionsgate could be worth more in a sale than it’s worth as an independent entity?
Lionsgate has a strong track record. But its shares tend to fluctuate with its most recent theatrical release. Wall Street analysts and investors have a wide range of opinions on the company. Some say it’s overvalued; some say it’s fully valued. The most upbeat have price targets of $14-$15 a share.
Lionsgate closed Friday at $9.24. It’s been one of the best performing media stocks over the past five years, even as the large congloms were struggling.
What makes Lionsgate particularly attractive to any potential buyer is its 5,000-plus title library, which includes the “Saw” franchise, “Reservoir Dogs,” “Monster’s Ball” and “Dirty Dancing.”
Viacom sold the DreamWorks library of 59 titles to Soros Fund Management for $900 million earlier this year. Last year, Sony and a group of partners paid $4.8 billion for MGM’s 4,000-title library.
While Icahn’s intentions aren’t clear — will he be a supportive shareholder or an activist shareholder? — he’d need to get backing from other investors for any bold move. Mark Rachesky’s MHR Fund Management owns 10%. Big funds like Capital Research & Management, Janus and Fidelity hold large positions.