A hostile bid to take control of North Vancouver’s Lions Gate Entertainment (NYSE:LGF) is going ahead following a long battle between the company’s board of directors and activist investor Carl Icahn.
In a release Tuesday morning, Icahn declared his intention to buy all the outstanding common shares of Lions Gate he does not already own for US$6.50 per share in cash. At press time, Lions Gate shares were up 8.4% to $6.54.
Icahn already owns 37.9% of the company.
The fight between Icahn and the board dates back to the spring when the company voted in favour of a shareholders’ rights plan, or ‘poison pill’, that would prevent any takeover attempts.
The vote went ahead despite the fact the B.C. Securities Commission had decided to cease trade the rights plan.
In June, the federal government backed Icahn’s bid for the company after the investor agreed to maintain production in Canada and preserve jobs.
At the time, Icahn had tendered a US$7 per share bid for the company that was expected to close June 16. That deal never closed.
Representatives from both sides subsequently discussed the buyout and entered a 10-day “standstill” agreement. That agreement expired at midnight Monday night.
Icahn does not believe Lions Gate’s current management or board have the wherewithal to lead the company.
According to Tuesday’s release, “the Icahn Group therefore intends to seek to replace all or the lion’s share of Lions Gate’s board of directors with the Icahn Group’s nominees.”
He also plans to hold the board responsible for any costs and damages the company might incur as a result of the buyout.
Neither Icahn nor Lions Gate could be reached for comment.
Check out BIV’s June 9 and May 13 daily editions for more background.