Icahn locks ‘gate
Carl Icahn wants to keep Lionsgate locked up.
The billionaire investor yesterday announced an unsolicited tender offer to buy another 13.2 million shares of Lionsgate stock, in an attempt to block the studio from pursuing deals for Metro-Goldwyn-Mayer or Disney’s Miramax.
Icahn currently holds an 18.9 percent stake in the Hollywood home of Tyler Perry and torture porn franchise “Saw.” He is seeking to increase that position to 29.9 percent by buying the additional shares for $6 each, or a total of just under $80 million.
If he’s successful, Icahn would become Lions- gate’s largest individual shareholder and have de facto control of the studio through a blocking position that could severely limit its strategic moves.
Icahn’s offer requires that Lionsgate not enter into “any material transaction outside of the ordinary course of business,” which includes any acquisition in excess of $100 million.
Lionsgate is currently in talks about buying both MGM and Disney’s Miramax imprint, either of which would exceed the $100 million acquisition limit. MGM is likely to cost upwards of $1.5 billion, and Miramax would cost at least $500 million.
“One of our concerns is that they’ll spend frivolously on a big acquisition in an attempt to hit a home run without bringing the deal to shareholders for a vote,” Icahn said in an interview with The Post.
Some Lionsgate shareholders were critical of its recent purchase of the TV Guide Network, but the studio didn’t need shareholder approval for the deal.
Historically, Icahn’s modus operandi has been to build up positions in companies, agitate his way onto the board, and eventually try to unseat management or force a sale or merger. That was the strategy he followed with Yahoo!, AOL Time Warner, Motorola, Blockbuster, and Take-Two Interactive, to name a few. But this time around, Icahn is trying to prevent Lionsgate from entering into a deal instead of strong-arming it into one.
After a period of inactivity, Icahn began amassing more Lionsgate shares in the past two weeks, which came as a surprise to the studio’s management.
“They thought he went away,” said one source close to Lionsgate. “Icahn picks a lot of fights, but when he loses he typically moves on to the next street corner.”
Lionsgate said in a statement that its board will review Icahn’s tender and make a recommendation to shareholders shortly. But after rebuffing Icahn’s attempts to gain board seats last year, it’s unlikely that Lionsgate directors will approve of his latest proposal.
Lionsgate’s credit facility states that any person or group acquiring more than 20 percent of the studio’s shares constitutes a change of control that would trigger a default on its loans, requiring immediate payback. But the default could be avoided through a waiver by the lenders or through the payback of the loan in full.
Lionsgate shares closed trading yesterday up 5 percent, or 25 cents, to $5.48.
