A British Columbia Securities Commission (BCSC) panel provided an explanation Friday morning for why it ceased trading on a shareholder rights plan adopted by Lions Gate Entertainment in an effort to resist a take-over bid by corporate raider Carl Icahn.
On April 27, the commission panel granted an application by the Icahn Group to cease trade securities related to the Lions Gate shareholder rights plan, which involved a “poison pill” strategy to prevent Icahn’s takeover bid.
The panel reasoned that take-over bids should leave shareholders of a target company free to make their own decisions about accepting or rejecting a bid.
The BCSC panel noted that, while Canadian securities regulators are reluctant to interfere with a board’s attempt to use a shareholder rights plan to protect a company’s interests, past cases have involved target company boards that were actively negotiating or soliciting competing bids or alternative transactions.
In the panel’s opinion, Lions Gate’s plan would result in its shareholders being deprived of the ability to respond to the Icahn bid; the plan had exhausted its usefulness and there was no justification for its continuation; and there was no evidence at the hearing on April 27 that the Icahn bid would be extended past its then expiry date of April 30.
The panel said it would elaborate on the summary reasons in its final reasons.