Icahn launches takeover bid for Lionsgate
Amended offer to purchase 'up to all' outstanding sharesTORONTO -- Activist shareholder Carl Icahn has turned his $6-a-share tender offer into a hostile takeover bid for Lionsgate.
The amended offer to purchase "up to all" of Lionsgate's outstanding shares comes a week after senior management at Lionsgate recommended shareholders rebuff Icahn's latest overture for control and influence of the Vancouver-based indie studio.
"Due to management's recent actions, I am now convinced that Lionsgate shareholders will never have the right to make important decisions," Icahn said Friday.
As the gloves come off, Icahn also said his Icahn Group will go to court to block a poison pill defense adopted by Lionsgate last week.
"The adoption of the poison pill represented a failure of certain conditions to the offer," Icahn said, opening the way for the amendment to launch a hostile takeover bid.
Icahn is looking to take his stake in Lionsgate from 19% currently to just below 30%, and to install representatives on the studio's board of directors.
A Lionsgate spokesman said the Icahn Group's amended bid, by not increasing the $6-per-share offer, remained "financially inadequate and not in the best interests of Lionsgate and its shareholders."
"Mr. Icahn's original offer was an attempt to control the company with a minority stake and without paying a control premium. Now he is going for full control without a control premium," the spokesman added.
Icahn said he would replace "top" management and the current board of directors at Lionsgate with his own nominees if his takeover bid succeeded.
The indie studio would face other drastic changes, including no longer pursuing expensive library catalogs.
"It should be up to the shareholders to determine if they wish to more than "double down" on another library, especially in light of the company's admitted 'substantial degree of leverage,' " he argued in his statement.
Icahn added library catalogs were falling in value due, in part, to "weak DVD sales."
Rather than pursue library assets, Icahn argued Lionsgate needed to aim "more at the consolidation of film and television distributors."
And Lionsgate would chop its operating costs under an Icahn-led regime.
"We expect to propose that the new board form a committee to oversee the retention of a third-party consultant tasked with dramatically reducing Lionsgate's overhead," the activist shareholder said.
"I understand that such a dramatic shift in management and growth strategy may thrust Lionsgate into a potentially volatile period of transition, but I believe the company will emerge much stronger on the other end," he added.