Firing another salvo in the battle for Lionsgate, Carl Icahn issued a gloomy assessment of the minimajor Monday and predicted its share price will decline below his $7 a share hostile takeover offer.
Lionsgate fired back by reiterating its contention that Icahn’s offer is inadequate, labelling his announcement as “simply the latest in a series of factual inaccuracies, errors and misleading statements.”
“I am very concerned about the future of Lionsgate and its present path,” Icahn said in a news release. He noted that in the 4 1/2 years he’s been a shareholder the stock has declined from a high of over $12 to a low of $4.85 four months ago.
Icahn said the reason why the stock has climbed back to $7 is due to two “artificial stimuli” — his offer, which expires Wednesday, and the fact that Lionsgate has joined the Russell 2000 Index.
“On Friday, by my calculation, 5 million shares were purchased at the closing price by index funds forced to purchase because of the ‘Russell listing,”‘ he added. “Since Lionsgate was listed on Friday, this stimulus is over. Since February, when the stock was $4.85, in my opinion, nothing positive has happened to enhancereal value.” Icahn also said he believed “firmly” that after the expiration of his tender offer, the price that Lionsgate will trade at will be lower than $7 per share.
Lionsgate shares were off 26¢ to $7.01 on the New York Stock Exchange in trading Monday, after gaining 27¢ Friday as the issue was added to the Russell 2000.
The tender offer, which Lionsgate has repeatedly labeled “inadequate” and “coercive,” has resulted in Icahn becoming the largest shareholder with 31.8%.
Lionsgate said in its response Monday that Icahn had understated the fiscal 2010 cash flow at $82 million, when it actually was $128 million, and noted that overheads in core businesses for fiscal 2010 were down 8% to $112 million.
Icahn also reiterated his criticism of Lionsgate management on multiple fronts — its strategy in producing movies, alleged over-spending and its informal talks about acquiring MGM, though he didn’t name the beleaguered studio.
“Lionsgate must stop producing big-budget films and must stop wasting time trying to acquire another film library,” Icahn said. “Tying two one-legged men together does not mean they will run faster — in fact it will slow them down.”
Icahn is still promising a proxy fight for control of the Lionsgate board.
Lionsgate hasn’t set the date for its annual meeting yet.
The minimajor said Icahn was trying to muddy the waters.
“Continued misstatements and inaccuracies shouldn’t distract our shareholders from the simple truth that our financial performance is strong, our momentum is growing and our direction is clear,” it said.
“Rather than subjecting our shareholders to a catalog of all of Mr. Icahn’s misstatements this morning, we again urge them to focus on the most important issue and reject Carl Icahn’s offer of $7 a share, which remains financially inadequate and grows more and more inadequate with each passing day.”