Icahn Offers To Purchase All Outstanding Shares Of Lions Gate (LGF)

On February 18, Carl Icahn called into the Fast Money Halftime Report on CNBC and said he is not interested in taking control of Lions Gate Entertainment (NYSE: LGF). You can find that story here. Apparently, Mr. Icahn was not being completely honest, or he has just simply changed his mind with regard to Lions Gate (LGF).

Today, Icahn announced that he is offering to purchase all outstanding shares of the motion picture studio for $6 a share. Lions Gate's Board of Directors is encouraging shareholders to reject the offer. LGF shares closed the trading day on Friday up 1.01% to $6.03.

Mr. Icahn stated:

"Due to management's recent actions, I am now convinced that Lions Gate shareholders will never have the right to make important decisions. I am dismayed that Lions Gate's board of directors chose to implement a poison pill and thus deny their shareholders the opportunity to participate in our Offer. I believe these tactics serve only to strip shareholders of an opportunity and entrench management. Lions Gate previously criticized our tender offer for being partial. That is no longer the case.

I believe that Lions Gate's management should not further leverage up the company to purchase a film library without allowing shareholders the opportunity to decide whether increasing exposure to this segment is wise. I believe library values are currently declining due to, in part, weak DVD sales. Lions Gate already has a major investment in a library – its own. It should be up to the shareholders to determine if they wish to more than "double down" on another library, especially in light of the company's admitted "substantial degree of leverage".(1) Lions Gate's latest actions convince me that the current management and board will never allow shareholders to make their own determination on this extremely important decision.

We therefore intend, if our offer is successful, to replace Lions Gate's board of directors with our nominees, several of whom would be Canadian citizens. I believe that the best course for Lions Gate is to pursue a strategy aimed more at the consolidation of film and television distributors, as opposed to the acquisition of library assets. Once in place, we are hopeful that our nominees would guide Lions Gate in that strategic direction. I also believe that it may be desirable to replace top management with several individuals who more closely share our vision for the future of the company. In addition, we expect to propose that the new board form a committee to oversee the retention of a third party consultant tasked with dramatically reducing Lions Gate's overhead.
I understand that such a dramatic shift in management and growth strategy may thrust Lions Gate into a potentially volatile period of transition, but I believe the company will emerge much stronger on the other end."