Lions Gate amends poison pill plan to account for Icahn stock following opposition of adviserBy AP
Friday, April 23, 2010
Lions Gate amends poison pill to count Icahn stock
LOS ANGELES — Lions Gate Entertainment Corp. said Friday it is amending the conditions necessary to approve a shareholder rights plan that would help it thwart a hostile takeover by investor Carl Icahn.
Under its new rules, the movie studio will count the votes held by the activist investor, who is trying to take control of the company and will vote to shoot the plan down.
Shareholders are set to vote on the rights plan, which contains a so-called “poison pill,” on May 4.
Icahn, who has a nearly 19 percent stake in the company, has offered to buy shares he doesn’t own for $7 per share, an offer he sweetened last week, up from $6. Lions Gate has said the higher offer is still too low.
Lions Gate shares closed up 29 cents, or 4.2 percent, at $7.18 on Friday, suggesting investors believe a better offer will emerge.
The company previously said it would exclude Icahn’s votes in deciding whether to adopt its poison pill.
It changed those rules after prominent proxy advisory firm RiskMetrics Group, once known as Institutional Shareholder Services, recommended shareholders vote against it.
If adopted, the shareholder rights plan would make it nearly impossible for a hostile acquirer such as Icahn to increase his stake in the company above 20 percent.
Among the reasons RiskMetrics opposed the plan was that it excluded Icahn’s shares from voting on it and that it would forbid attempts to take over the company by bidding for less than all the shares.
Icahn has said he could stop buying shares once he had acquired a 50.1 percent stake.
That could leave shareholders who tendered their shares to him with some left over, and keep them invested in a company that Icahn would control. Lions Gate management has said that possibility created a coercive and uncertain environment for shareholders.
Lions Gate said by changing the conditions, it was listening to its shareholders.
“We listened carefully to what our shareholders have to say. We believe that this was a revision many of them wanted to see,” said Lions Gate spokesman Peter Wilkes.
Icahn said in a statement Friday that the revised rules did not go far enough, because it limited voting to shareholders of record as of March 23. That would prevent later shareholders from voting, such as those who bought on the expectation that they could sell for a quick profit to Icahn.
Lions Gate, based in Vancouver and with headquarters in Santa Monica, Calif., will face a hearing by regulators in the Canadian province of British Columbia on Monday on whether its poison pill plan can proceed.
The niche movie studio was behind the Oscar-winning movie “Precious: Based on the Novel ‘Push’ By Sapphire.” It also owns the TV Guide network and made the “Saw” horror movies and such television shows as “Weeds” and “Nurse Jackie.”
Its mock superhero movie, “Kick-Ass,” debuted in first place at the box office last weekend.