Lions Gate, Icahn Battle Heats Up3/25/2010 1:01 PM Eastern
Lions Gate Entertainment and activist investor Carl Icahn have stepped up the rhetoric in their most recent battle over the past week, with the movie studio accusing the former corporate raider of having no "vision," and Icahn countering that Lions Gate's myopia is what got it into trouble in the first place.
Icahn launched a hostile bid for all of Lions Gate's shares on March 19 , offering current shareholders $6 in cash for each stare they hold. That deal -- minus the 19% of Lions Gate shares Icahn already owns -- would cost the former corporate raider about $574 million. It was the second attempt to grab control of the company this year -- in February, Icahn, who has been a vocal critic of the studio, which owns the TV Guide Channel, is a partner in premium channel Epix and produces several hit cable shows like Mad Men and Weeds, offered $6 each for 13.2 million shares, a deal which would have made him the largest individual holder of Lions Gate stock.
On March 23, Lions Gate's board of directors rejected Icahn's latest bid -- it had already rejected the earlier offer -- and stepped up the growing vitriol by claiming that although Icahn has been a vocal critic of Lions Gate's management, he has no track record of actually running a business, offers "no meaningful vision" in his latest takeover attempt and has not offered a control premium for the company.
Icahn responded a day later in an open letter to CEO Jon Feltheimer, chastising Lions Gate for its stagnant stock price and adding that its so-called vision is misdirected.
"You claim that I offer no ‘meaningful vision,' thereby implying that you have one," Icahn wrote. "I cannot help but wonder why your ‘vision' - if so ‘meaningful' - never translated into shareholder value?"
Icahn wrote that Lions Gate shares had traded as high as $11.40 each in 2004, but began a precipitous decline in September 2008, reaching a low point of $4.85 each on Feb. 10 of this year.
"I believe that one of my strongest traits as an investor is that I don't personally claim to be a visionary in regard to any particular industry," Icahn wrote. "I believe in finding strong managers and holding them accountable. If the stock price of a company remains stagnant for years, as it has with Lions Gate, then clearly something is wrong. I suggest that your directors have failed shareholders."