Carl Icahn steps up fight with Lions Gate
Billionaire investor Carl Icahn stepped up his effort to take control of the boutique movie studio Lions Gate Entertainment Corp. on Friday, saying he will put up his own slate of candidates to replace the company's board.
Icahn, who has a roughly 19 percent stake in Lions Gate, has been tussling with management since last year.
In a lengthy open letter to the company's board Friday, Icahn jabbed at Lions Gate's directors for allowing its stock price to sink and for trying to block his efforts to buy up the company's shares. He said he hopes a new board will move quickly to replace management.
"Since the board is clearly unwilling to tell the emperor he wears no clothes, it is left up to the shareholders to take action," Icahn said in his letter.
Messages left with a Lions Gate spokesman were not immediately returned.
Trying to replace the board is a familiar tactic for Icahn.
In one recent battle, he tried to oust Yahoo Inc.'s board in 2008 after the company turned down Microsoft Corp.'s $47.5 billion takeover offer. Yahoo eventually appeased Icahn by allowing him to take a board seat himself rather than kicking out the rest of the company's directors. Icahn left Yahoo's board last year, happy with the company's new CEO, Carol Bartz, and its decision to hire Microsoft to provide search results.
In the case of Lions Gate, he is looking to take over the entire company. Lions Gate, which is based in Vancouver but has most of its operations in Santa Monica, Calif., backed the Oscar-winning movie "Precious: Based on the Novel 'Push' By Sapphire." It also owns the TV Guide network and produces television shows, including "Weeds" and "Mad Men."
Icahn is offering the studio's stockholders $7 per share for the stake that he doesn't already own, up from a previous offer of $6. The bid expires Wednesday and so far shareholders representing about 3.7 percent of the outstanding stock have accepted. Icahn has said he will not raise the offer.
Lions Gate shares were down a penny to $6.98 in midday trading. The shares have traded between $4.81 and $7.37 over the past year.
This week, Lions Gate shareholder Mark Cuban, owner of the NBA's Dallas Mavericks, said he plans to tender his 6.4 million shares to Icahn. That would put him over the 20 percent threshold that Lions Gate says would trigger a default on its debts. To get around a default, the company could get a waiver from creditor JPMorgan Chase & Co., and Icahn has offered a bridge loan.
In his letter Friday, Icahn criticized Lions Gate for writing terms into its debt contracts that would "frighten" investors into opposing his bid.
"Had the board not agreed to these controversial 'poison put' provisions in the first place, shareholders would not be in the dire situation in which we now find ourselves," he said.