Authorities kill Lions Gate’s second poison pill targeting Icahn

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A Canadian regulatory body has ordered an end to Lions Gate Entertainment’s second attempt to enact a ‘poison pill’ provision that would have prevented dissident shareholder Carl Icahn from accumulating more than 38% of the company’s stock.

The decision was issued late Monday by the British Columbia Securities Commission in Vancouver, where Lions Gate, the studio behind the Tyler Perry movies and the cable television show ‘Mad Men,’ is legally domiciled.

It’s not the first time that Lions Gate has failed in an attempt to thwart Icahn by issuing a rule preventing shareholders from owning more than a certain percentage of stock. A previous poison pill with a ceiling of 20% was voided by the BCSC in April.

Lions Gate’s board adopted the new poison pill in July. The company thought it would pass legal muster because it was not enacted in the context of a tender offer by Icahn.

But several weeks later, Icahn launched a new tender, which expires this Friday. It offers all shareholders $7.50 per share for their stock.

At the same time, he and Lions Gate are working together on a potential merger that would combine the studio with Metro-Goldwyn-Mayer.

Meanwhile, the two sides are awaiting a verdict following a trial last week at the British Columbia Supreme Court over a controversial transaction Lions Gate made in July that converted debt to equity and in the process diluted most shareholders. Icahn’s stake was reduced from 38% to 33.5%, while the company’s second-largest shareholder, Mark Rachesky, who received the new stock, went from 19% to 29%.

-- Ben Fritz