Icahn Ups Lionsgate Tender Offer Price

NEW YORK: Carl Icahn has increased his tender offer for Lionsgate stock up to $7.50 per share, from the previous bid of $6.50 per share.

The billionaire investor is looking to take full control of the independent studio. His current offer is conditional upon the studio rescinding a debt-to-equity swap with shareholder Mark Rachesky, upping his stake to about 29 percent and diluting Icahn’s interest to about 33 percent. Icahn will also accept Rachesky’s shares being converted into a new class of non-voting common shares, which could be eligible to be tendered into the offer. The offer expires at 8 p.m. on October 22.

Announcing the new tender offer, the Icahn group noted, "Lionsgate’s latest actions (including the recent implementation of a second poison pill after the first poison pill was struck down by Canadian securities regulators and the issuance of Lions Gate common shares to a fund controlled by director and significant shareholder Mark Rachesky) have increased the Icahn Group’s concern that the directors are no longer acting as fiduciaries. We believe it is reprehensible that this board recently authorized the issuance of a significant block of stock to one of its own members at $6.20 per share—a bargain price in light of the fact that the board recently advised shareholders that the shares were worth $8.85 per share. It is important to note that the board did not make any attempt to determine whether Lions Gate could have sold stock to a third party for more than the $6.20 per share price at which the company issued shares to Mark Rachesky. 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. The Icahn Group believes that this board will stop at almost nothing to entrench its position at the expense of shareholders. However, we believe that even these directors will realize that their fiduciary duties dictate that they not deprive shareholders of the opportunity to receive a significant premium for their shares and therefore not enter into further inappropriate transactions which would breach the conditions of the offer. The Icahn Group has determined, in order to protect the large position it now holds, that it is necessary to gain control of Lionsgate and remove the current board. We have therefore decided to pay a large premium for control of Lionsgate and are hereby increasing the offer price to $7.50 per share."

Lionsgate’s board said it will review the revised offer "and will make its recommendation to shareholders promptly."