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Icahn extends Lions Gate takeover bid by 10 days

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After failing to generate much interest from shareholders so far in his takeover bid, Carl Icahn is keeping up the heat on Lions Gate Entertainment.

The activist investor announced that he is extending until May 10 his $7-per-share tender offer to take over the Santa Monica film and television studio that was supposed to end this evening. No other terms of the offer, which require that enough shares be tendered to raise his stake from just under 19% to more than 50%, were changed.

As of today, there doesn’t appear to be much interest in Icahn’s offer among shareholders. As of 3:30 p.m. Pacific Daylight Time, 90 minutes before his offer expired, a little more 6.5 million Lions Gate shares, 5.6% of its total outstanding stock, had been offered to Icahn.

‘His offer is inadequate and our shareholders recognized that,’ a Lions Gate spokesman said. [Updated at 5:57 p.m. with Lions Gate spokesman’s response.]

Icahn may be hoping that between now and May 10 Lions Gate will lose its appeal of a Canadian regulatory body’s annulment of the studio’s proposed poison pill designed to thwart a takeover. If the annulment is upheld, that could provide a boost to Icahn’s bid.

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It’s also possible that Icahn will use that time to try to strike a deal with Lions Gate management, who may become concerned that he could buy those 6.5 million shares in a future revised offer. If he did, that would bring his bring his ownership stake to well above 20%, which could force the company into a technical default on its debt covenants.

Lions Gate stock closed down 1% at $6.92 today before Icahn announced the extension of his tender offer.

-- Ben Fritz

Related:

As Icahn’s Lions Gate bid expires, several Hollywood endings loom


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