Lions Gate rejects latest Icahn bid; calls $6-per-share offer too low

Tuesday, March 23, 2010

Lions Gate rejects latest Icahn bid

SANTA MONICA, Calif. — Lions Gate Entertainment Inc. rejected on Tuesday the latest bid by activist investor Carl Icahn for control of the film studio, calling the offer too low. Lions Gate also said the unsolicited offer wouldn’t hamper its acquisition strategy.

The company said its board voted unanimously against Icahn’s offer to buy all of its outstanding shares for $6 each, which would value the deal at about $575 million.

Lions Gate had already rebuffed an offer of $6 per share by Icahn last month that would have raised his stake in the company to 30 percent from 19 percent. The company also rewrote its bylaws to make such a takeover attempt more difficult in the future, a move Icahn has said he will challenge in court.

Lions Gate said Icahn’s offer is little changed except that he wants the whole company now.

Vice Chairman Michael Burns said in an interview that Icahn is “trying to get complete control of Lions Gate without paying a premium.”

The initial bid was 15 percent above the stock’s latest closing price at the time, but fell short of analysts’ average share price target of $8.67.

Icahn and Lions Gate management have been wrestling over control of the company for more than a year. The latest flash point is Lions Gate’s interest in buying the Metro-Goldwyn-Mayer Inc. studio or The Walt Disney Co.’s Miramax Films division.

Icahn is against an acquisition and says shareholders should have a say in the decision. Among other reasons, he argues falling DVD sales make film catalogs like those held by MGM and Disney less valuable than they used to be.

Lions Gate is believed to have made a bid to acquire MGM by Monday’s deadline, but Burns would not confirm it, citing the confidential nature of the process.

He added, however, that Icahn’s play for control would not keep the company from making strategic acquisitions.

“We have a very consistent growth strategy including acquisitions that we’ve built shareholder value on over the last 10 years,” Burns said. “We’re not going to stop building shareholder value because of this financially inadequate offer.”

Messages left with Icahn Group seeking comment on Tuesday were not immediately returned.

Shares of Lions Gate rose 17 cents, or 2.9 percent, to close at $5.99 — still below the offered price.

Lions Gate, which is based in Vancouver but operates out of Santa Monica, Calif., is the studio behind the Oscar-winning movie “Precious: Based on the Novel ‘Push’ By Sapphire.” It also owns the TV Guide network and produced the “Saw” horror movies and TV shows including “Weeds” and “Nurse Jackie.”

Its upcoming movie “Kick-Ass,” about a high school student who decides to become a superhero even though he has no powers or training, hits theaters next month.

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