Lionsgate emerged as a clear victor over Carl Icahn, with shareholders backing its slate of a dozen board nominees while spurning Icahn’s quintet of dissident candidates.
Preliminary results were announced Tuesday morning at the mini-major’s annual meeting at the SLS Hotel in Beverly Hills; the exact percentages will be released at the end of the week.
“It’s time to get back to work,” said vice chairman Michael Burns at the end of the meeting, referring to the two-year battle with Icahn.
But prospects for peace for Lionsgate appear dim. Although Icahn didn’t attend the event, which lasted about 40 minutes and drew fewer than 100 people, he returned to blasting Lionsgate a few hours later and accused execs of subverting shareholder democracy.
“This whole situation is a very sad commentary on the state of corporate governance today,” Icahn said.
Icahn’s slate included former Overture Films topper and MGM exec Chris McGurk, and his message remained consistent — that Lionsgate needs to improve its stock price by cutting spending on film production and overhead. Those assertions have been disputed extensively by the mini-major, which contends that it’s improving its revenues, cash flow and balance sheet on a diverse slate of films and TV shows.
“We appreciate the strong support we have received from our shareholders throughout this process,” the company said. “Today’s outcome reaffirms that Lionsgate shareholders continue to have confidence in the board’s and management team’s strategy to enhance value for all Lionsgate shareholders.”
The meeting took place a day after Icahn, who owns 33% of Lionsgate, abandoned his hostile takeover effort after a New York court denied his request to issue an injunction blocking director Mark Rachesky from voting his shares. Icahn and Lionsgate have been tussling over a July debt-to-equity transaction, and the billionaire said his slate would have been elected had an injunction been issued.
“We are disappointed that shareholder democracy has failed — or rather was subverted — in the case of Lionsgate’s annual meeting of shareholders as a result of the voting of over 16 million shares that were issued to director Mark Rachesky at a bargain price in a transaction approved by Lionsgate’s board of directors ‘at a midnight meeting’ in July in an effort to entrench themselves,” Icahn said.
Icahn disclosed Monday that he had let his $7.50 a share hostile bid expire, though speculation persists that he may make a higher offer. The stock took a 6% hit on Tuesday, falling 45¢ to $6.64 on the New York Stock Exchange — marking the first time since August that the issue has traded under $7.
Lionsgate chief exec Jon Feltheimer and Burns asserted after the meeting that the one-day decline wasn’t unexpected after Icahn withdrew the offer.
The Lionsgate annual meeting has usually been held in Toronto during the Toronto Film Festival in September, but the event was pushed back to December amid the hostile takeover plus ongoing legal actions. Talks to reach a settlement giving Icahn representation on the board were futile.
Burns said Tuesday that he wasn’t opposed to giving Icahn a board seat. “We’re opposed to giving him super powers that other board members don’t have,” he added.
Burns also tossed cold water on the notion of a merger between MGM and Lionsgate, which Icahn’s supported. “We have said publicly that we were interested in MGM at one time, but for the moment, that ship has sailed,” Burns added.
MGM is expected to emerge as early as this week from a pre-packaged bankruptcy. Icahn owns about 14% of MGM’s debt.