Billionaire investor Carl Icahn pulled his hostile bid for Lions Gate Entertainment Corp. after a court ruling last week allowed a director to keep his increased voting power.
A New York judge ruled on Dec. 9 that director Mark Rachesky could vote shares he acquired in a deal that diluted Icahn’s stake. Icahn, the largest shareholder with a 33 percent stake, said in a statement today that he was dropping his bid. He still urged investors to vote for his five board nominees at the Lions Gate’s annual meeting tomorrow.
Icahn’s $7.50-a-share tender offer for the film studio was conditioned upon his request that a court block Rachesky from voting the shares he acquired in July that gave him a stake of almost 29 percent, according to the statement. Icahn, 74, had said management conspired with large shareholders to thwart his bid for Vancouver-based Lions Gate.
“We will continue to monitor the situation at Lions Gate and will aggressively take all actions necessary to protect our investment,” Icahn said in the statement. “We recognize that it is now virtually impossible for us to prevail in the proxy contest due to the dilutive transaction in question.”
All Lions Gate shares that were previously tendered and not withdrawn will be returned, Icahn said.
The judge said an important reason in his determination was that Lions Gate’s lawyers told him another investor meeting would be held in September 2011.
Lions Gate, run from Santa Monica, California, fell 35 cents, or 4.7 percent, to $7.09 at 4:05 p.m. in New York Stock Exchange composite trading for the biggest drop since April 27. The shares have gained 22 percent this year.