Icahn wants bigger Lionsgate stake

Shares spike 9% on news, closing the day 5% higher

Carl Icahn is seeking more control over Lionsgate by significantly upping his investment in the company, a strategy that could derail any designs the mini-major might have on MGM or Miramax.

Icahn already owns 18.9% of Lionsgate but wants to increase it to 29.9%, so he plans a tender offer of $6 per share for more than 13 million additional shares. The offer price amounts to a 15% premium to where the stock closed on Friday.

When Icahn's plans were made public Tuesday, the stock spiked 9%, closing the day 5% higher at $5.48.

Icahn intends to make his offer conditional on Lionsgate not entering into any material transaction outside of the ordinary course of business, which includes shelling out more than $100 million for an acquisition.

Lionsgate, though, has already bid about $1.5 billion for MGM, and it is also interested in MIramax, which Disney is shopping for about $700 million. Presumably, then, Icahn might deem them both too pricey.

"I don't want to see Lionsgate rolling the dice without putting it to a shareholders' vote," Icahn told The Hollywood Reporter. "With a 30% stake, my views will hopefully get more respect."

Icahn, though, wouldn't say what he thinks either of those companies are worth.

"The value of film libraries has declined quite a bit recently. Therefore I wouldn't want to see Lionsgate pay a large price for one," he said.

If Icahn's yet-to-be made tender offer is successful and he acquires in excess of 20% of the company, it could affect Lionsgate's $340 million credit line. Lionsgate, though, has only borrowed $12 million against that facility, and a default isn't automatically triggered but up to the discretion of lender JPMorgan Chase.
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