Studio urges shareholders not to tender shares to mogul

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

Lionsgate announced the rejection Wednesday morning, urging shareholders not to tender their shares to Icahn, who owns about 19% of Lionsgate. The company repeated its characterizations of Icahn’s $7 a share 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 Wednesday. “We believe that the offer pales in comparison to the value inherent in the world class platform we have established over the past ten years.”

Lionsgate also said Wednesday that all the company’s directors and executive officers have said they currently 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 down 3 cents to $6.73 in mid-session 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’s portrayed Icahn as a meddler who doesn’t understand show business and an opportunist.

“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.”

Lionsgate’s home to the Saw and Tyler Perry franchises, as well as “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.

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