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Lions Gate again urges shareholders to reject Carl Icahn's takeover bid

June 4, 2010 |  4:08 pm

Lions Gate Entertainment again urged shareholders to reject a takeover bid by Carl Icahn, who last week said that he plans to wage a proxy war for control of the Santa Monica film and television studio.

Last Tuesday, the activist investor extended and amended his $7-per-share bid by eliminating the minimum number of shares required to make his offer effective.

Under the previous terms, Icahn would have had to receive 50% of the shares in order for him to buy any additional stock. The revised offer, which expires June 16, enables him to buy any and all shares tendered to him.

Icahn, who is Lions Gate's second largest shareholder, with a nearly 19% stake, could wind up with significant clout if he receives between 20% and 50%, even though he won't fully own the company. For example, if Icahn wins 30% he can block any major acquisitions, and at 33% Lions Gate will be on the hook for multimillion-dollar severance payouts to senior management. Last month, the company set aside $16 million just in case that happens -- a move that Icahn lambasted.

In response to Icahn's revised offer, Lions Gate said in a statement Friday, "In making its determination, the board concluded that the elimination of the minimum tender condition to the offer has exacerbated the fundamental deficiencies of the offer. Accordingly, the board recommends that shareholders continue to reject the Icahn Group's unsolicited offer ... and for those who have tendered to withdraw them."

Lions Gate shares closed down four cents to $7.04.

-- Claudia Eller