Lions Gate shareholders rebuff Icahn board slate
Wednesday, December 15, 2010
LOS ANGELES (AP) — Lions Gate Entertainment Corp. said Tuesday that its shareholders rebuffed the latest challenge from billionaire investor Carl Icahn, rejecting his candidates and electing all 12 that management put forward for Lions Gate’s board of directors.
The 74-year-old activist investor said the result was a “very sad commentary on the state of corporate governance today” and said the results would have been different if a court ruling had gone his way last week.
A New York court on Thursday denied his request to bar a rival shareholder from voting some of his shares. The decision prompted Icahn to say on Monday it would be “virtually impossible” to get his nominees elected. He also dropped his offer to buy more shares at $7.50 each.
“The biggest losers are the shareholders of Lions Gate who were deprived, as a result of the machinations of Lions Gate’s board and senior management, of the opportunity to receive a large premium for their shares in our tender offer,” he said in a statement Tuesday.
Shares fell 45 cents, or 5.4 percent, to close Tuesday at $6.64. They had dipped as low as $6.51 earlier in the day.
The studio behind the “Saw” horror franchise and TV shows like “Weeds” and “Madmen” said Tuesday that the preliminary results showed shareholders continue to back its strategy, which included denying Icahn a seat on the board.
“The full management slate was elected,” said Lions Gate spokesman Peter Wilkes. “Our shareholders have spoken.”
The final results of the vote are expected to be released next week.
Icahn’s lawsuits in British Columbia, where Lions Gate is based, and in New York sought to prevent rival shareholder Mark Rachesky from voting shares he acquired in a complex debt-for-equity transaction in July that diluted others’ stakes, including Icahn’s. After the transaction, Rachesky owns about 29 percent, compared with about a third for Icahn.
The B.C. court rejected his case in November, although Icahn is appealing. Icahn also took it to New York, where a trial court is to hear it, though a judge on Thursday declined to bar Rachesky from voting his new shares.
Icahn said Tuesday that he would continue to monitor the situation at Lions Gate, which operates out of Santa Monica, Calif., but is based in Vancouver, and “aggressively take all actions necessary to protect our investment.”
The battle has raged all year and gotten increasingly feisty. Earlier this month, Icahn released excerpts from an e-mail written by Lions Gate’s vice chairman, Michael Burns, stating that the July swap was meant to “dilute the (expletive)” out of Icahn. Publicly, Lions Gate had said the transaction was part of its plan to reduce its debt.
In October, Lions Gate sued Icahn, claiming he was playing a “double game” by buying up Lions Gate shares while criticizing its attempt to merge with struggling studio Metro-Goldwyn-Mayer Inc., then backing the plan after he bought a large portion of MGM debt at a discount.
MGM later entered a prepackaged bankruptcy without Lions Gate’s participation.