Carl Icahn Looks to Up His Stake in Lions Gate
Corporate raider Carl Icahn is pushing to dramatically grow his stake in Lions Gate.
The stock got a boost on the news that Icahn is looking to grow his 18.9 percent control of the company to 29.9 percent, offering $6 per share for 13 million shares, though as of now it hasn't hit that $6 mark. Icahn is sending the message that Lions Gate is undervalued and that he wants a board seat. But that's not all he's saying.
Icahn's tender offer came with the condition that Lions Gate not acquire any assets over $100 million. He's referring to the fact that Lions Gate has bid on MGM studio (, ) and has expressed interest in buying Miramax's library from Disney. Icahn is making it clear that he thinks buying either of the studios would be a poor allocation of capital.
Lions Gate has said that if more than 20 percent of its shares are acquired by a person or group then its lenders have the right to accelerate the maturity of the company's borrowings.
Icahn seems to be looking to reassure investors about the potential for default that this creates. In its tender offer the Icahn Group proposes default could be avoided either through a lender or having Lionsgate prepaying some of that debt.
A Wall Street analyst who closely watches the stock (but didn't want to go on the record) called this a "peculiar event."
Lions Gate has confirmed receipt of Icahn's offer, saying that its board of directors is reviewing the proposal and will make a recommendation to shareholders shortly.
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