Icahn Boosts Offer for Lions Gate to $7.50 a Share
Billionaire investor Carl Icahn
Jeremy Bales/Bloomberg
Billionaire investor Carl Icahn said he increased his offer for shares of Lions Gate Entertainment.
Billionaire investor Carl Icahn said he increased his offer for shares of Lions Gate Entertainment. Photographer: Jeremy Bales/Bloomberg
Billionaire investor Carl Icahn increased his offer to buy the Lions Gate Entertainment Corp. stock he doesn’t own to $7.50 a share from $6.50.
The offer, expiring Oct. 22, isn’t subject to financing, Icahn said today in a statement. The hostile bid is dependent on the reversal of a transaction that gave board member Mark Rachesky additional shares or the conversion of that stock to a non-voting class.
Icahn is also pressing a proxy contest for Lions Gate, which distributes the “Saw’” horror films and produces the “Mad Men” series on the AMC cable TV network. He has asked the Supreme Court of British Columbia to reverse the issuance of Lions Gate stock to a fund controlled by Rachesky. A July 20 exchange of debt for equity increased his stake to almost 29 percent, while Icahn’s fell to about 33 percent from 38 percent.
“Given its recent decision to issue shares to an insider at $6.20 per share without conducting a market check, we would normally expect that the board must recommend that shareholders accept our offer of $7.50 per share, but with this board, anything is possible,” Icahn said in the statement.
The Canadian court is scheduled to hear the case Oct. 12.
Lions Gate, run from Santa Monica, California, said in a statement its board will review Icahn’s latest offer and urged shareholders to take no action.
Box-Office Successes
Icahn’s bid is too low given the studio’s recent box-office success with films including “The Expendables” and “The Last Exorcism,” Matthew Harrigan, a Denver-based analyst for Wunderlich Securities, said today in a note to investors.
“The Expendables,” an action film starring Sylvester Stallone, may return as much as $40 million in profit to Lions Gate after home-video and television sales. Profit from the horror film “The Last Exorcism” may reach $35 million, Harrigan wrote. The studio also stands to earn money from future releases including Tyler Perry’s “For Colored Girls” and “Madea’s Big Happy Family,” he said.
The offer values Lions Gate at $1.02 billion, based on 136.2 million shares outstanding. Icahn currently holds 44.6 million, according to his statement today. His offer is also conditioned on enough stock being tendered to boost his holding to more than 50 percent.
Lions Gate rose 65 cents, or 10 percent, to $7.14 at 4:15 p.m. in New York Stock Exchange composite trading, the biggest gain since May 29, 2009.
Icahn, 74, offered $6 a share for Lions Gate in March. He raised the offer to $7 a month later, and then reduced it to $6.50 in July after the debt-equity swap with Rachesky, 51.
To contact the reporters on this story: Sarah Rabil in New York at srabil@bloomberg.net; Michael White in Los Angeles at mwhite8@bloomberg.net
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