Fast Exclusive: Lions Gate Vs Icahn
In what may be a CNBC first, two adversaries in a hostile takeover attempt went head-to-head on live television.
It’s safe to say there’s no love lost between Lions Gate and one of the company's biggest shareholders, Carl Icahn. In fact the acrimony appears to be nearing a boiling point after Icahn fired off a letter in which he said Lions Gate failed shareholders this week by rejecting his $575 million buyout offer.
Addressed to CEO Jon Feltheimer and released Wednesday, the letter said Lions Gate has rewarded executives with "bonuses, options and golden parachutes" as the value of the company's stock declined.
There's been a lot of mudslinging and some of the issues are complex; but ultimately Icahn is worried about Lions Gates' balance sheet, the company's debt load and whether it can afford a major acquisition.
For months speculation has been swirling in Hollywood that Lions Gate is looking to increase its footprint. Although Miramax and other names are often talked about, the most likely object of desire -- and the source of all the trouble -- is MGM.
Published reports say that Lions Gate is one of six parties in the second round of bidding for MGM. The value of the offers hasn't been disclosed, but people close to the situation have indicated that MGM won't accept a deal for under $2 billion, according to Variety.
On CNBC's Fast Money, Carl Icahn told the traders, "To spend (even) $1 billion dollars on MGM is absurd. These guys can’t (afford) that."
Although Lions Gate won't say if they're actively bidding for MGM, in an exclusive interview on Fast Money, Michael Burns, Lions Gate vice chairman did say “we would not over-pay (nor would we acquire) assets if they were not accretive to our company. But we would be remiss if we didn’t look at every single deal that we could leverage."
Meanwhile, back to the mudslinging - Lions Gate on Wednesday called Icahn's offer of $575 million or roughly $6/ share "woefully inadequate." “The offer is ridiculous,” Burns said to CNBC.
And on Fast Money Ichan responded to Burns.
“If you think $6 is such a terrible bid I won’t get it. If I’ve undervalued the company nobody will tender it," said Icahn.
Also Ichan is aggravated by a poison pill which triggers whenever any hostile acquirer gets a stake in the company exceeding 20 percent.
The company rewrote its bylaws to make a takeover attempt more difficult, a move Icahn has said he will challenge in court.
However, Burns tells the desk, “This is not a typical pill. If Carl ends up with 50% of the stock that he doesn’t already own, the pill goes away.”
So who won the showdown, Icahn or LionsGate?
3 of the Fast Money traders sided with Burns; Pete Najarian commented, “Carl is just trying to get something at a great price!”
What do you think? We want to know!
* As you can imagine the conversation between Michael Burns and Carl Icahn was heated to say the least. Watch the videos above then tell us what you think!
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Trader disclosure: On March 24th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC) (MSFT), (NUE), (BTU); Najarian Owns (BAC) Calls; Najarian Owns (C) Calls; Najarian Owns (CAT) Calls; Najarian Owns (DVN) Calls; Najarian Owns (F) Calls; Najarian Owns (GE) Calls; Najarian Owns (INTC) Calls; Najarian Owns (MCD) Call Spread; Najarian Owns (MOS) Calls; Najarian Owns (RHT) Call Spread; Najarian Owns (YHOO) Call Spread; Terranova Is Short Crude Oil May Futures; Terranova Is Short (CAL), (UAUA), (GS); Terranova Owns (QCOM), (APA), (AMSC); Terranova Owns (GLD) April Puts; Terranova Owns (GS) Puts; Funds Managed By Dennis Gartman Are Short Euro; Stutland Equities Is A Market Maker In VIX And SPX Options; Stutland Owns (TXN)
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