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Lions Gate Investors Reject Icahn Slate, Back Company

Tuesday, 14 Dec 2010 03:48 PM

Lions Gate Entertainment Corp. shareholders voted for all 12 of the company's board nominees in a victory against hostile suitor Carl Icahn, who had proposed a dissident slate.

The vote signaled the latest win for Lions Gate in its long and costly war with the billionaire shareholder, who launched a hostile $7.50-a-share bid and for years has criticized the studio that makes "Mad Men" for bad management.

Lions Gate shares fell 5.5 percent or 39 cents to $6.70 a share on the New York Stock Exchange.

Icahn is not expected to go away, although he has abandoned his tender offer; and as long as he retains his 33 percent stake, Lions Gate's largest and most vocal shareholder is likely to keep pressuring the studio to cut costs and raise its stock price.

He scored some points with investors last week when proxy advisory firms took Lions Gate's financial performance to task, but Icahn admitted it would be "virtually impossible" to win seats for his five nominees after a court denied his motion to block a big investor from voting his full stake.

One of Icahn's nominees, Daniel Ninivaggi, was at Lions Gate's annual meeting and vowed to keep up the fight.

"We believe the vote is the direct result of bad corporate governance," Ninivaggi told Reuters, referring to a controversial debt-for-equity swap in July that effectively diluted Icahn's stake to 33 percent from 38 percent, which hurt his chances in the proxy contest.

Icahn is seeking to unwind the swap; but Lions Gate last week gained an advantage when a New York judge denied Icahn's motion for an injunction to block its second-largest shareholder, Mark Rachesky, from voting shares he got in the transaction.

The court battle continues and there will be a full trial on the issue in the next few months, requiring Lions Gate to hold another shareholder meeting in September.

Icahn announced he would not buy any shares tendered in his offer, which expired on Monday, because the bid had been conditioned upon receipt of the injunction.

Icahn is likely to push for a merger between Lions Gate and storied studio Metro-Goldwyn-Mayer, which is the focus of another lawsuit between Lions Gate and Icahn.

Lions Gate said for now it is not pursuing that.

"We have said publicly that we were interested (in MGM) at one time but for the moment that ship has sailed," said Michael Burns, vice chairman of Lions Gate, when asked whether the company was interested in merging with MGM.

In October, Lions Gate accused Icahn of secretly plotting to merge the two studios, but only after he acquired large stakes in both companies at depressed prices to ensure he maximized his own profits.

Earlier this month, MGM's reorganization plan won court approval, clearing the way for the Hollywood studio to emerge from bankruptcy, and sources have said they expect the two studios to explore a merger.

© 2017 Thomson/Reuters. All rights reserved.

   
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Lions Gate Entertainment Corp. shareholders voted for all 12 of the company's board nominees in a victory against hostile suitor Carl Icahn, who had proposed a dissident slate. The vote signaled the latest win for Lions Gate in its long and costly war with the billionaire...
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Tuesday, 14 Dec 2010 03:48 PM
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