Icahn Renews Lions Gate Bid


Activist investor Carl Icahn renewed
his battle for control of Lions Gate Entertainment last
week, rejuvenating his tender offer for the parent of
the Lionsgate studio’s stock after a 10-day truce.

Icahn, who has been critical of Lions Gate management
in the past, agreed to a 10-day moratorium on July
9, pledging not to make another tender offer for the media
company until after his earlier $7-per-share proposal
expired on July 19. During that moratorium, Icahn
and Lions Gate agreed to work together on “certain acquisition

While some observers thought that to be code for
Metro-Goldwyn-Mayer, the movie studio that Lions
Gate was said to be among the bidders for (and whose
purchase Icahn opposed), no deals came to fruition.
Instead, Icahn launched another tender offer for the
remainder of Lions Gate stock, this time for $6.50 per
share, a 7% discount to his prior tender offer. The latest
offer expires on Aug. 25.

Lions Gate, which produces such cable hits as Mad
Men, Weeds and owns the TV Guide Channel, said in a
statement that it would review Icahn’s latest offer and
make a recommendation to shareholders “promptly.”
It should be noted that Lions Gate had recommended
that shareholders reject Icahn’s last tender offer, which
was for more money.

About 22.7 million shares were tendered in the earlier
offer, boosting Icahn’s holdings in the company from
about 19% (22.1 million shares) of outstanding stock to
37.9% (44..8 million shares). But that was only to last for
a day. On July 20, Lions Gate converted $100 million in
debt which effectively reduced Icahn’s stake in the company
to 33.5%.

Lions Gate converted about $100 million of its senior
subordinated notes into common stock at about $6.20
per share, a 2% premium to the July 19 closing price of
Lions Gate’s common stock. The deal, which was described
by the company as a deleveraging transaction,
also diluted existing shareholders, including Icahn.

Icahn has been an outspoken critic of Lions Gate
management and has called for the ouster of its entire
board of directors if he were to gain control of the