Lionsgate saga
Wednesday April 28, 2010Home Blogs Columnists Economics Green Business In Your Face Money & Politics Newsletters The Debate Room Videos What's Your Story? Finance Finance Home Companies Economics Blog Economy Industry News Investing Blog Investing: Europe Learning Center People Overview Philanthropy Real Estate Investing Retirement Planning Sectors & Industries Stocks Stocks & Markets Technology Technology Home CEO Tech Guide Columnists Computers Consumer Electronics Digital Entertainment Internet Investing Mobile & Wireless Product Reviews Software Tech Maven Innovation Innovation Home Architecture Auto Design Brand Blog Columnists Design Design Blog Game Room Innovation Index Marketing Media Blog NEXT Blog Management Management Home Business Schools Board of Directors Book Reviews Career Management Case Studies Columnists Jobs Leadership Management IQ Blog Team Management Small Business Small Business Home Financing Policy Sales & Marketing Small Business Blog Smart Answers Starting a Business Viewpoints Global Global Home Asia Europe Europe Insight Blog Eye on Asia Blog
Bloomberg
Lions Gate’s ‘Poison Pill’ Voided by Regulators (Update2)
April 28, 2010, 4:14 PM EDT
More From Businessweek
Icahn Asks Regulator to Annul Lions Gate Poison Pill (Update3)
Icahn to Press Canada Regulators to Void Lions Gate Poison Pill
Lions Gate’s Poison Pill Has 61% Support So Far (Update1)
Icahn Campaigns Against Lions Gate’s Poison Pill Plan (Update2)
Lions Gate Board Rejects Icahn’s Increased Hostile Takeover Bid
Story Tools
e-mail this story print this story digg this save to del.icio.us add to Business Exchange (Updates shares in fifth paragraph.)
By Joe Schneider and Ronald Grover
April 28 (Bloomberg) -- Lions Gate Entertainment Corp.’s “poison pill,” designed to thwart Carl Icahn’s hostile takeover bid for the independent film studio, was rejected by Canadian securities regulators.
Lions Gate shareholders are scheduled to vote on the poison pill on May 4. The Vancouver-based studio urged investors to back the plan while it weighs an appeal, according to a statement yesterday. Icahn, 74, hailed the commission’s ruling.
“Lions Gate shareholders should have the right to decide for themselves whether they wish to sell their shares in our tender offer,” Icahn said in a statement.
The decision by the British Columbia Securities Commission removes one impediment to Icahn’s $7-a-share tender offer, which values the maker of “Saw” and “Tyler Perry” films at about $826 million. Panel Chairman Brent Aitken, who issued the ruling, said reasons for the decision would follow.
Lions Gate rose 25 cents, or 3.8 percent, to $6.87 at 4 p.m. in New York Stock Exchange composite trading. The shares have gained 19 percent this year.
“Icahn goes forward and tries to buy the firm,” said Alan Gould, an analyst with Soleil Securities in New York who rates the shares “buy” and doesn’t own them. “To get over 50 percent of the company, he clearly has to go over $7 a share.”
Shareholder Voting
The poison pill, or shareholder rights plan, is designed to make a hostile takeover more expensive by offering investors additional stock at a discount. Voting so far on the plan was running 61 percent in favor, Vice Chairman Michael Burns testified on April 26.
Lions Gate is also urging investors to reject Icahn’s bid. The company plans to appeal the ruling to Canadian courts, the Financial Times reported.
If Icahn doesn’t attract enough votes for his tender offer by the April 30 deadline, he may extend it, Icahn’s deputy counsel, Keith Schaitkin, testified on April 26.
Icahn has made it clear he wants to gain control of the company by acquiring more than 50 percent of the shares, his lawyer, Mark Gelowitz, said in a closing statement to the commission yesterday.
The billionaire investor owns almost 19 percent of Lions Gate, which is run from Santa Monica, California. The poison pill was set to be triggered once he reaches 20 percent.
The panel’s decision was issued after a 1 1/2 day hearing at which Icahn’s lawyers urged the commission to void the poison pill and Lions Gate’s lawyer pressed for a ruling allowing the shareholder vote to go ahead.
Uphill Battle
The panel followed recommendations from its own lawyers, who said the poison pill would prevent the shareholders from responding to a legal offer.
“The company should make sure the defensive plan is voted on before the expiry of the bid,” commission lawyer Shawn McColm told the panel yesterday. “To do otherwise adds another defensive tactic” for companies, he said.
Icahn faced an uphill battle in winning shareholder support to overturn the poison pill, including board members and allies who control more than 30 percent of the stock, according to data compiled by Bloomberg.
Mark Rachesky, co-founder of MHR Fund Management LLC, is a former Icahn associate who joined the board in July. He holds 23.2 million shares, or 19.7 percent, and said in a March 2009 filing that he is “principally supportive” of management.
Los Angeles-based Capital Group Cos. owns 12.3 million shares, or 10.4 percent, and fund manager Gordon Crawford called Lions Gate a “very well-run company” in an April 6 story in the Los Angeles Times. “All Carl is doing is running up legal bills, distracting management and doing nothing productive for shareholders,” the newspaper quoted Crawford as saying.
--With assistance from Michael White and Ronald Grover in Los Angeles. Editors: Peter Blumberg, Anthony Palazzo.
To contact the reporters on this story: Joe Schneider in Vancouver at jschneider5@bloomberg.net; Ronald Grover in Los Angeles at rgrover5@bloomberg.net
To contact the editors responsible for this story: David E. Rovella at drovella@bloomberg.net; Anthony Palazzo at apalazzo@bloomberg.net
News 
Market Data 
Discover 
AI
