The board of directors at Lionsgate has unanimously turned thumbs down on an offer by Carl Icahn to buy out all other shareholders of the company. The board is advising shareholders not to accept Icahn’s offer of $6 each for their shares.
The rejection was hardly unexpected, since the Lionsgate board had previously rejected Icahn’s original bid to increase his stake in the company and called it “inadequate.” Icahn had originally bid to increase his stake in the TV and movie production/distribution company from 18.9% to 29.9%, before increasing the $6 per share offer to include up to 100% of Lionsgate’s shares.
We believe that nothing has changed — the offer remains financially inadequate and still does not reflect the full value of Lionsgate shares,” said Lionsgate Co-Chairman and CEO Jon Feltheimer. “The only substantive change is that the Icahn Group is now bidding for full control of the Company without offering a meaningful vision, without demonstrating a relevant track record of industry experience and without paying a control premium. We believe that this financially inadequate proposal stands in stark contrast to our patient, disciplined strategy of building a strong and diversified Company step by step over the past 10 years under a seasoned Board of Directors and an experienced management team. Our plan for continuing to grow our portfolio of businesses is reflected in our ongoing achievements and initiatives each week,” Feltheimer added.
According to Lionsgate’s board, the Icahn offer is inadequate at $6 per share, noting that the average price target of Wall Street analysts who follow the company as of March 22nd was 46.3% higher than that. The board also charged that Icahn lacks experience in the company’s field of business, that the tender offer is highly conditional and that an acquisition by Icahn of majority control would constitute a default under Lionsgate’s credit agreements.