The federal government has backed activist investor Carl Icahn’s bid to buy a controlling interest in Vancouver-based Lions Gate Entertainment (NYSE:LGF).
Canadian Heritage Minister James Moore approved the buyout this morning under the Investment Canada Act based on a number of commitments Icahn has made to the government.
“The investor has shown its willingness to promote Canadian cultural products,” said Moore. “This decision is good for Canada. It will result in Lions Gate maintaining or increasing Canadian film and television production, and protect and preserve Canadian jobs.”
BIV attempted to contact the ministry, but a spokesman said Moore had nothing further to add.
The ministry got involved because the act requires the heritage minister to approve any deal that could result in a Canadian cultural business coming under foreign control.
The government’s support comes just weeks after the board of Lions Gate approved a “poison pill” shareholders’ rights plan to block Icahn from taking over the company.
At the time, Lions Gate said approximately 70% of shareholders, excluding shares affiliated with Icahn, voted in favour of the shareholder rights plan and 30% voted against.
If Icahn buys control of Lions Gate, he’s agreed to maintain the company’s employment and film production in Canada, extend an agreement to produce films in Quebec, ensure that Maple Pictures has the exclusive right to distribute Lions Gate films in Canada and increase support for Canadian cultural events.
Lions Gate’s share value was up $0.04 to $7.04 on this morning’s news.
Icahn said in a statement that he was “pleased” with the government’s decision to support the takeover.
He also said the offer to buy the company for $7 in cash per share is expected to close June 16 barring any further “inappropriate defensive measures” made by Lions Gate.