Lionsgate rejects Icahn’s new offer

Investor has no coherent plan, company says

Keeping the hostilities at a boil, Lionsgate has rejected Carl Icahn’s sweetened offer for the minimajor, a week after the activist investor raised his hostile bid by 17%.

With a shareholders meeting coming in two weeks, Lionsgate amped up its criticism of Icahn as a bumbler and a meddler.

“Mr. Icahn’s flip-flops and contradictory statements further demonstrate that Mr. Icahn lacks an understanding of and a coherent plan for the company,” it said in a letter to shareholders announcing its rejection Wednesday morning.

Icahn, who owns about 19% of Lionsgate, boosted his bid to $7 a share from $6 on April 15. The company repeated its characterizations of Icahn’s offer as inadequate, opportunistic and coercive.

“We believe that the Icahn Group’s offer remains financially inadequate and does not reflect the full value of Lionsgate shares,” Lionsgate CEO Jon Feltheimer said. “We believe that the offer pales in comparison to the value inherent in the world class platform we have established over the past 10 years.”

Lionsgate also said Wednesday that the company’s directors and executive officers have all said they don’t plan to tender their shares to Icahn’s offer. It also urged shareholders to enact the company’s poison-pill provision that would dilute the value of Icahn’s shares if he exceeds a 20% stake.

Lionsgate has set a May 4 meeting in Toronto for shareholders to vote on the pill, which it calls a “shareholder rights plan.”

The latest moves by Lionsgate were expected by investors. Shares were up 7¢ to $6.87 in trading on the New York Stock Exchange.

Frustrated by the stagnant stock price that’s barely half of its 2007 high, Icahn’s argued that Lionsgate’s management and board of directors has “failed” and pledged that he will oust the current management team if he gains control. He’s also said his offer represents a “premium” valuation for the assets.

Lionsgate continued to portray Icahn as an opportunist who doesn’t understand showbiz.

“The Icahn Group has timed its offer to exploit the challenging macro-economic operating environment currently impacting the media industry,” said Lionsgate in a new letter to shareholders. “Film and television library values are also currently being pressured in the short term by the numerous studio assets presently on the market.”

Letter pointed out that Icahn had said in February that he wasn’t looking to take control of Lionsgate before launching a hostile takeover and has made a variety of “conflicting” statements about the TV operations.

Lionsgate is home to the “Saw” and Tyler Perry franchises, as well as TV shows “Mad Men” and “Weeds.” Its superhero spoof “Kick-Ass” led last weekend’s box office and has grossed $21.4 million in its first four days.

“Lionsgate boasts one of its strongest upcoming slates with ‘The Expendables,’ starring Sylvester Stallone; ‘Killers,’ starring Katherine Heigl and Ashton Kutcher; ‘Buried’ and ‘The Next Three Days,’ starring Russell Crowe,” the letter said. “Lionsgate expects to generate an average of $100 million to $125 million of annual free cash flow in fiscal years 2013 through 2015.”

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