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Lions Gate Rejects Icahn Offer

3/12/2010 12:36 PM Eastern

Lions Gate Entertainment rejected a $6 per share tender offer for more that 13 million shares of its stock by former corporate raider Carl Icahn, claiming his offer to gain control of the company is simply not enough.

And in an effort to thwart further attempts by Icahn and others to wrangle control of the studio on the cheap, Lions Gate proposed adopting a "poison pill" plan to discourage further unsolicited takeover attempts.
Icahn launched his tender for 13.2 million shares in February for $6 each, at the time a premium of about 14% to the $5.23 per share trading price of Lions Gate stock. The tender would have given Icahn, who already controls about 18.9% of Lions Gate's outstanding shares, the largest individual stake in the company at about 29.9%.
In a statement, Lions Gate said that its board of directors has unanimously rejected the Icahn offer as "financially inadequate and coercive and not in the best interest of Lions Gate shareholders."
Lions Gate shares were up slightly (16 cents each) in Friday morning trading to $5.48 per share.
In an effort to block similar takeover from Icahn or others, Lions gate's board also proposed a shareholder's rights plan, also known as a "poison pill," that would discourage such actions. The board has authorized the issuance of one share purchase right for each outstanding common share as of March 22. According to a filing with the Securities and Exchange Commission Friday, the plan would impose a significant penalty on a company or individual that attempts to acquire more than a 20% interest in Lions Gate. Lions Gate has set a date -- May 4 -- for a special meeting of shareholders to confirm implementation of the rights plan.
Icahn 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. The former corporate raider tried to gain control of a large block of Lions Gate stock last year. Last March, after failing to successfully negotiate a seat on Lions Gate's board of directors, Icahn launched a tender offer for the studio's convertible debt (which would have given him a 20% interest in the company), only to abandon the effort in May after a fraction of debt holders took advantage of his offer.

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