Mark Cuban likely to tender Lions Gate shares to Icahn
Media entrepreneur and Dallas Mavericks owner Mark Cuban said Thursday that he would probably tender his shares of Lions Gate Entertainment Corp. to Carl Icahn, pushing the activist investor closer to taking control of the Santa Monica movie and TV studio.
“I really think I’m going to tender, and I will have a conversation with them [Lions Gate management] today,” Cuban said on the CNBC program “Strategy Session.”
When asked why he would tender his shares, Cuban said, “I have my reasons [that] I don’t want to get into. But I think it’s the right move for right now and the right move for the long term, for the company and me.”
With Cuban’s shares, Icahn would become Lions Gate’s largest shareholder, lifting him into position to be much more involved in the studio’s operations.
Cuban owns 5.3% of Lions Gate stock, according to an April SEC filing. Icahn owns nearly 19%; approximately 4% of shareholders had agreed to tender to him before he extended his $7-a-share tender offer June 1. When his bid expires Wednesday, Icahn could own 28% or more of Lions Gate stock.
Reacting to Cuban’s decision, a Lions Gate spokesman said, “We believe that he’s leaving money on the table.” Lions Gate shares closed down 6 cents at $6.99.
Icahn said last week that he would wage a proxy battle to take over the studio’s board, increasing pressure on Lions Gate’s management.
Given his media background — Cuban also owns movie theater chain Landmark Theatres and film distributor Magnolia Pictures — and his ties to Icahn, Cuban would be a logical candidate for Icahn’s slate of directors. In 2008, Cuban was on the investor’s proxy slate to seize control of Yahoo’s board. (Yahoo bought Cuban’s Internet streaming service Broadcast.com for $5 billion in 1999.)
Once Icahn’s stake exceeds 20%, it would trigger a technical default under the terms of Lions Gate’s $340-million revolving credit facility with JPMorgan Chase & Co. However, the bank could grant the studio a waiver. Icahn has said he would provide a bridge loan if necessary.
If Icahn’s holdings exceed 33%, Lions Gate’s five top executives, including Chief Executive Jon Feltheimer and Vice Chairman Michael Burns, could leave the company with multimillion-dollar payouts, and the investor could veto any major acquisitions.
This week, Icahn received the blessing of the Canadian government to take over the company. Though Lions Gate operates out of Santa Monica, it is legally based in Canada.
Times staff writer Dawn C. Chmielewski contributed to this report.
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