An enriched offer for North Vancouver’s Lions Gate Entertainment Corp. (NYSE:LGF) has boosted the film company’s share price by 10%.
Activist investor Carl Icahn increased his hostile takeover bid for Lions Gate to US$7.50 per share, up from US$6.50 per share when the bid was announced last month.
The announcement led to a 10% increase in Lions Gate’s closing share price to US$7.14 per share, up from US$6.49 per share on Monday.
Shares traded as high as US$7.40 per share with relatively heavy trading after the upgraded bid was announced before falling in afternoon trading.
Icahn is aiming to gain a majority 50.1% stake in the company in order to replace Lions Gate’s board, which he said were no longer acting as fiduciaries. His most recent criticism of the board is the deal between the company and one of its directors and significant shareholders, Mark Rachesky, whereby 16.2 million shares were issued to him for $6.20 per share.
Icahn said in a release, “We believe it is reprehensible that this board recently authorized the issuance of a significant block of stock to one of its own members at $6.20 per share, a bargain price in light of the fact that the board recently advised shareholders that the shares were worth $8.85 per share.”
Icahn’s bid is conditional on the transaction between Lions Gate and Rachesky being either rescinded or reformed to convert the shares into non-voting class common shares.
The B.C. Supreme Court will address the issue on October 12.
Background on this developing story is available in previous BIV daily stories dated July 28 and 20, June 9 and May 13.