Studio and billionaire in talks to resolve long-running battle
The vitriolic battle between Lionsgate and Carl Icahn may be nearing an end.
Lionsgate disclosed Monday it had agreed to explore holding formal discussions with Icahn at his request while in the midst of a $7-a-share hostile takeover bid.
The possible peace comes after more than a year of bitter — and expensive — bickering, triggered by Icahn’s unmet desire for seats on the 12-member board plus his frustration over the stock price. Lionsgate’s portrayed the billionaire investor as an incompetent meddler while Icahn’s called for the ouster of Lionsgate management.
Analyst Matthew Harrigan of Wunderlich Securities told Daily Variety that it’s quite plausible that the talks could lead to reconciliation despite the heated rhetoric.
“There have certainly been some strong words, but I’d say that a settlement is quite possible,” he added. “Lionsgate appears to have become a little more conciliatory in its recent discussions with major shareholders.”
Lionsgate’s SEC filing didn’t disclose the substance of the discussions. It also noted it’s held unproductive talks with Icahn 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,” Lionsgate said. “However, consistent with the board’s duty to explore all alternatives that could reasonably be expected to be in the best interests of Lionsgate, its shareholders and other stakeholders, 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.”
Shares of Lionsgate closed down 2.4% at $6.54 Monday on the New York Stock Exchange.
Speculation rose recently that Icahn and Lionsgate had held informal talks and that Icahn could be willing to back off from the takeover bid in exchange for seats on the Lionsgate board.
The talks between Lionsgate and Icahn come less than a week after Lionsgate scored a victory in its ongoing battle with Icahn, receiving the backing of 56% of its shareholders for its poison pill — even though that option has been rescinded by Canadian regulators.
That May 12 vote was essentially a referendum to gauge support for Icahn’s hostile bid. The results indicate that Icahn, who holds an 18.8% stake in Lionsgate, faces an uphill battle in persuading shareholders to back his takeover effort.
In Monday’s filing, Lionsgate continued to urge shareholders to spurn Icahn’s $7-a-share offer, reiterating its description of the bid as “financially inadequate, opportunistic and coercive, and is not in the best interests of Lionsgate, its shareholders or other stakeholders.”
Icahn’s pushed back the deadline twice for his takeover offer, which is now set to expire Friday. Icahn said last week that 6.3% of shares had been tendered under the terms of his offer, and most analysts expect that he will have to sweeten the offer to gain enough shareholder support to reach the 50.1% level.
The SEC filing also said Lionsgate’s board has approved placing $16 million into a trust that would pay its severance obligations to five top managers if they’re kicked out “without cause” after a takeover by Icahn.
The filing named chief executive Jon Feltheimer, vice chairman Michael Burns, co-chief operating officers Joe Drake and Steve Beeks and exec VP Wayne Levin. The trust would be irrevocable for a year.