Shares of Lionsgate have taken a second consecutive 4% hit amid uncertainty about the impact of a possible merger with MGM and a general decline in the overall market.
The stock was down 27¢ to $6.09 in trading Friday on the New York Stock Exchange — Lionsgate’s lowest closing price since March 23 — during a session that saw the Dow Jones Industrial Average fall 2.5% due to disappointing earnings reports and concerns about economy’s direction.
Lionsgate is in the midst of a 10-day truce in its battle with its largest shareholder, Carl Icahn, who owns nearly 38% of the minimajor. That truce, created to explore merger and acquisition opportunities, is due to expire Monday but could be extended.
Earlier this week, Lionsgate execs presented a merger plan in a meeting with MGM debtholders. Neither MGM nor Lionsgate have commented on that meeting but it’s believed that Lionsgate — which has nearly $2 billion in annual revenues — has proposed that the surviving entity retain the MGM name and be headed by Lionsgate toppers Jon Feltheimer and Michael Burns.
MGM received a sixth extension Wednesday on debt payments from its 140 creditors, who have given the beleaguered studio a forebearance that will expire Sept. 15. MGM’s also met in recent weeks with execs from Spyglass and Summit in recent weeks to discuss scenarios under which MGM would reorganize and receive production funds.
On Thursday, Caris & Co. analyst David Miller to lower his rating on Lionsgate to “average” from “above average,” citing the possibility that Lionsgate was “empire building” at the expense of its balance sheet.
Miller also reduced his price target on the shares to $7 from $8.50.
Lionsgate shares hit their high this year on June 25 at $7.27, near the end of Icahn’s hostile tender offer of $7 a share.