Lionsgate rejects Icahn tender offer

Says it will adopt a 'poison-pill' shareholder rights plan

TORONTO -- Lionsgate's board of directors has unanimously rejected activist shareholder Carl Icahn's unsolicited tender offer as "financially inadequate and coercive," opening the way for stepped-up battle for control of the indie studio.

"The board strongly recommends that Lionsgate shareholders not tender their shares into the Icahn Group offer," Vancouver-based Lionsgate said Friday in response to Icahn's March 1 bid to buy up to 13.2 million shares of the indie studio at $6 each to take his investment from 18.9% to 29.9%.

To fend Icahn off, Lionsgate said it will adopt a "poison-pill" shareholder rights plan that will see one share purchase right issued for each outstanding common share as of March 22.

Also after consulting with its financial and legal advisers, Lionsgate said in a schedule 14D-9 regulatory filing said Icahn's bid for greater control over the studio's boardroom threatened the company's long-term growth plans.

Should it acquire a 29.9% stake in Lionsgate, the Icahn Group would seize enough pull to veto transactions and other company matters that required shareholder approval, Lionsgate cautioned shareholders.

Icahn also proposed to take control of Lionsgate without paying a "control premium," the company said.

The unsolicited control bid would also cause Lionsgate to default on its credit facilities, the filing stated, if it did not secure a waiver from senior lenders.

Icahn in his own March 1 regulatory filing said his company was not looking to take over Lionsgate, but instead secure more control over the company, including naming some board members, and to derail any expensive bids from Lionsgate for Hollywood assets like the Miramax library or MGM.

Lionsgate CEO Jon Feltheimer countered in a statement that Icahn securing control of Lionsgate would only derail long-term corporate growth plans.

"We have built the Company piece by piece over the past 10 years through a patient, consistent and disciplined approach to both internal growth and external acquisitions," Feltheimer said.

"We are confident we can better serve our shareholders by continuing to execute our strategic business plan, and the acquisition of effective control by the Icahn Group would significantly jeopardize that plan," he added.

Lionsgate has retained Morgan Stanley as its financial advisor and Heenan Blaikie LLP as legal advisor. Perella Weinberg Partners LP is the financial advisor for a special committee of Lionsgate board of directors, while Wachtell, Lipton, Rosen & Katz is their U.S. legal advisor and Goodmans LLP their Canadian legal advisor.
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