Icahn again extends Lions Gate tender offer
With once-promising talks at a standstill, Carl Icahn on Friday again extended his $7-per-share tender offer to take control of Lions Gate Entertainment Corp.
In a sign that the parties are still very much at odds, activist investor Icahn took another public swipe at Lions Gate’s board, calling its recent decision to put aside $16 million for potential golden parachutes for top executives “reprehensible.”
“This latest action, together with the board’s failed and misguided attempts to implement a poison pill and its reckless retention … of no less than six professional advisory firms … to defend against our offer, shows just how far removed this board has become from its mission of holding management accountable and safeguarding the interests of shareholders,” Icahn said in a statement.
Late last week, representatives for Icahn and Lions Gate were engaged in discussions about a potential settlement to end the investor’s two-month battle to seize control of the Santa Monica film and television studio.
According to people familiar with the situation, however, those talks hit a sticking point. The primary issue was how much power Icahn would be able to exercise on the board of directors relative to his holdings. Icahn — who is the company’s second-largest shareholder, with a nearly 19% stake — has said he wants his son Brett to join the board and sit on newly formed committees overseeing production costs and overhead expenses, both of which the investor has said are too high.
In Friday’s announcement, Icahn extended his offer only six business days, to June 1. His previous two extensions were each for 10 business days.
Icahn said that as of midday Friday, 4.66 million shares had been tendered to him, about 4% of the company’s total outstanding shares. That’s down from two weeks earlier, before the last extension, when almost 7.5 million shares had been tendered.
Despite the ongoing tension and apparent lack of progress in his current tender offer, Icahn did not announce any changes to his offer terms Friday. He could choose to raise the price he’s offering. Another option is to lower the threshold of stock he needs to own for his tender offer to take effect, which currently stands at just over 50%.
With a stake of 20% to 50%, Icahn would not technically control Lions Gate, but would be able to exercise significant power over its business decisions.
His most aggressive option would be to launch a proxy war and put up his own slate of directors to take control of Lions Gate’s board.
It’s also possible that productive talks could restart and the two sides could reach an agreement and drop their long-running feud.
Lions Gate’s attempts to enact a poison pill provision that would block a takeover of the company have been stymied by officials in Canada, where the company is legally domiciled.
Icahn could not be reached for comment.
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