As Icahn’s Lions Gate bid expires, several Hollywood endings loom

Icahn prevails: If shareholders controlling more than 32% of the company agree to sell their shares, he will take over the company and replace top management including Chief Executive Jon Feltheimer and Vice Chairman Michael Burns. Insiders say this is virtually impossible, as large shareholders including top stakeholder Mark Rachesky, who owns nearly 20%, Gordon Crawford’s Capital Group, with about 11%, and management, which collectively holds 3%, have said they won’t tender. Lions Gate’s largest bondholder, John Kornitzer, who holds about 2% of the stock and has been publicly supportive of management, has also said he won’t tender. Icahn extends offer and changes terms without raising price: If some investors tender their shares but not enough to take Icahn to more than 50%, he could extend or relaunch the offer and change the conditions. This would potentially let him take his stake to between 20% and 50%, a level at which he could exercise significant control without owning the company. Icahn sweetens bid: He could raise the offer even higher -- his initial bid was $6 per share -- in order to entice more shareholders to participate. Icahn guns for a proxy fight: Icahn could make good on his one-time promise to launch a proxy contest, hoping shareholders will vote in a new slate of directors that he supports. Icahn throws in the towel: If very few or no stockholders tender shares to Icahn, he could give up on his quest of Lions Gate. Judging by his history, however, it’s unlikely Icahn will walk away empty-handed. Icahn and Lions Gate cut a deal: If Feltheimer and Burns feel Icahn is likely to change his tender terms once again and cause serious trouble for the company, they could agree to meet the investor’s long-time request for several seats on Lions Gate’s board of directors. In return, he would likely agree to stay at his current stock holdings of less than 20%. According to people familiar with the situation, Lions Gate executives and Icahn have discussed such a possibility, but it’s very unlikely the parties would strike a deal before the tender results are disclosed.