Michael Burns says execs are open to MGM pact
Lionsgate is stalking MGM, with Lionsgate toppers meeting with MGM to pitch its merger proposal to combine the two studios.Lionsgate vice chairman Michael Burns told CNBC on Wednesday that Lionsgate execs are in New York to meet with MGM, then hinted that the meeting had taken place already. MGM filed a pre-packaged bankruptcy last week and is expected to emerge from Chapter 11 on Dec. 2. “If we can make the right transaction, make an accretive transaction for our shareholders, then we would absolutely embrace that idea,” Burns said in the interview. “We’re very interested in the MGM transaction.” Shares of Lionsgate closed up 14¢ at $7.37 in trading Wednesday on the New York Stock Exchange after hitting a peak of $7.64 during the session. Shares hit a 52-week high of $7.65 on Oct. 15. Burns also said that Lionsgate’s largest shareholders — Carl Icahn, Mark Rachesky and Gordon Crawford — support a merger with MGM. Icahn owns 33.5% of Lionsgate and about 18% of MGM’s debt. Icahn’s expected to launch a proxy battle at Lionsgate’s annual meeting on Dec. 14, but he’s also advocated combining MGM and Lionsgate. Burns said he talked with Icahn on Tuesday night at the New York premiere of “The Next Three Days,” which opens Nov. 19. He predicted that the Russell Crowe thriller will open in the $9 million-$10 million range, then hold well. Icahn’s supporting the MGM bankruptcy plan, which was revised to exclude the Spyglass Entertainment library and provides the billionaire with a board seat at the revamped MGM. Lionsgate also filed an unusual lawsuit against Icahn two weeks ago, accusing him of duplicity in trying to take over MGM. Burns told CNBC Wednesday that the major Lionsgate shareholders want to settle its legal battles with Icahn but did not elaborate. Lionsgate reported Tuesday a net loss of nearly $30 million for the quarter ended Sept. 30, in part because of actions taken to fend off Icahn, who’s been seeking to take control through a variety of hostile tender offers. His latest bid at $7.50 a share expires Friday. The company blamed the loss on higher marketing costs for three films, including “The Expendables,” but it also attributed the drop to $4 million in corporate defense costs and an equity interest loss of $20.7 million related to a debt-for-equity swap the company instituted in July that effectively diluted Icahn’s growing stake in Lionsgate from 38% to 33.5%. Icahn challenged the swap in a court in British Columbia, where Lionsgate is headquartered, but the court ruled against him last week. Icahn is appealing that ruling. Executives did not address Icahn in their press release put out after market close on Tuesday, nor did they during a conference call with analysts on Wednesday morning.
Want Entertainment News First? Sign up for Variety Alerts and Newsletters!