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Icahn delays Lions Gate tender offer for second time

May 10, 2010 |  1:15 pm

Carl Icahn's crusade to take over Lions Gate Entertainment will last at least another 10 days.

The activist investor announced Monday that he is extending his $7-a-share tender offer for the Santa Monica film and television studio until May 21. The hostile offer was originally set to expire April 30 and was then delayed until May 10.

As of 9 a.m. Pacific time on Monday, Icahn said, shareholders have offered to tender fewer than 7.5 million shares, which represents less than 6.5% of the company's outstanding stock. That's a small increase from the approximately 6.5 million shares that had been tendered to Icahn before his offer's original expiration.

Icahn's offer is contingent on his acquiring about 31% of Lions Gate shares, enough to push his total holdings to more than 50%. However, he could relaunch his offer with a lower ownership threshold or higher per-share price. The more shares Icahn has, the greater the pressure he could put on Lions Gate to strike a compromise deal that gives him several seats on the company's board of directors.

Lions Gate responded to the day's news by trumpeting how few shareholders have so far taken up Icahn's bid, which is only 11 cents higher than the stock's Monday closing price of $6.89.

"Lions Gate’s shareholders have demonstrated that they believe the Icahn Group’s offer is inadequate and does not reflect the value of their investment," the company said in a statement. "Lions Gate appreciates the support of its shareholders and encourages all of its shareholders to continue to reject the Icahn Group’s offer by not tendering their shares, and for those who have, to withdraw them."

Before May 21, Lions Gate shareholders will get more clarity on the company's proposed "poison pill" that could block Icahn from substantially increasing his holdings. The proposal has so far been voided by a regulatory body and appeals court in British Columbia, where the studio is legally domiciled.

Lions Gate may petition the regulatory body to reconsider its decision, however, and is going ahead with a shareholders' meeting scheduled for Wednesday to vote on the poison pill.

Management of the studio has been clashing with Icahn, its second-largest shareholder, for more than a year. As part of his hostile takeover bid launched in March, the well-known Wall Street investor has said he would replace top management, including Chief Executive Jon Feltheimer and Vice Chairman Michael Burns, as well as cut overhead and film production costs.

-- Ben Fritz

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