It warns shareholders it would be 'mistake' to accept offer

Lionsgate has gone directly to shareholders in its battle with Carl Icahn, portraying him as a meddler, and declaring it would be a “grave mistake” to accept his takeover offer.

The minimajor made the assertion Monday in a letter to shareholders in advance of a May 4 meeting to enact the company’s poison pill provision that would dilute the value of Icahn’s shares if he exceeds a 20% stake.

Shares of Lionsgate slipped 2¢ to $6.22 in trading Monday, 4% above Icahn’s $6 a share offer.

“The Icahn Group lacks media industry expertise yet seeks to interfere in Lionsgate’s strategy and management and derail the company’s growth strategy to build value for all Lionsgate shareholders,” the company said in the 13-page missive.

Under the heading “Icahn clearly does not understand media companies and risks destroying the value of your investment,” Lionsgate cited Icahn’s involvement as a member of the Blockbuster board, asserting that the movie rental chain experienced “substantial losses that have threatened its solvency” during his tenure.

It noted that he later left the board and sold a “substantial” portion of his holdings at a loss after Blockbuster’s market capitalization declined by nearly $2 billion.

And the missive declared that Icahn hasn’t come up with a plan for Lionsgate other than implying last month in a TV interview that it should stick to distribution.

“The company believes that it would be a grave mistake to allow Mr. Icahn, who lacks relevant media industry expertise, to take control of your company,” the letter said, adding that Icahn also has threatened to replace top management.

“As you know, your management team has significant experience and expertise in the media industry,” the letter said. “The Lionsgate team is uniquely positioned within the industry as a result of the strategic plans our management team has implemented and we look forward to capitalizing on the world class platform we have established — don’t transfer the value inherent in your Lionsgate investment to the Icahn Group.”

Icahn, who owns 19% of Lionsgate, said in a regulatory filing last week that the poison pill would “frustrate” the ability of shareholders to decide whether to accept his offer.

Upset by a stagnant stock price — with shares trading at barely half their 2007 high, Icahn is attempting to buy the 81% of Lionsgate that he doesn’t own at $6 a share via a tender offer that expires April 30.

“The Icahn Group believes that the poison pill seriously prejudices the interests of Lionsgate shareholders by precluding them from exercising their fundamental right to decide whether to tender their Lionsgate shares to the Icahn Offer,” the filing said.

But Lionsgate said Monday that the pill — which it calls a “shareholder rights plan” — does not prevent other offers. Most analysts believe Icahn’s offer won’t succeed unless he sweetens it.

Lionsgate reiterated its previous criticisms of Icahn, asserting he is “opportunistic” because media valuations are under pressure and that the offer is “coercive,” undervalues the company and could trigger a default in its credit line.

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