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I'm Paying Large Premium For Lions Gate: Icahn

Billionaire activist investor Carl Icahn is making a plea to shareholders of Lions Gate to accept his offer to buy the movie studio.

He says he has a better plan than management to improve operations.

Icahn's offer to buy up Lions Gate for $7 a share expires on Wednesday. He currently holds more than 37 million shares, or a 32 percent stake.

"I can’t quite understand why every share holder wouldn’t want to tender," Icahn tells Fast Money. "I think I’m paying a very large premium."

Considering the stock closed at $7.01 on Monday that offer might feel a little low.

However, Icahn thinks the only reason shares are at current levels is because he's in it. Investors often follow Icahn into a position on the belief he will maximize shareholder value.

Icahn Vs. Lions Gate - The Disagreement

Icahn believes that Lions Gate should be a distributor of independent films, not a producer, especially of big budget movies.

"We want this company to change direction. My real inclination is the company must change and get rid of the costs it has," he tells the desk.

Icahn goes on to say the company must also drastically reduce its annual operating expenses of $180 million and "clean up" its balance sheet.

"Long-term it’s got great potential I just think it’s going in the wrong direction."

What does this mean for speculation that the current management of Lions Gate would like to merge with MGM?

"In order to do a merger they need 2/3 (of shareholders to approve) and I own 32.6% of Lions Gate" says Icahn. "I don't think they can do a merger from my point of view."

Lions Gate didn't immediately respond to a request for comment from our news partner, the Associated Press.
What's the trade?

Carl Icahn is a shrewd shopper. I don’t think Lions Gate will trade around $7 for long, says Jon Najarian. Icahn is trying to get the stock for cheap and I don’t blame him.

Icahn is an investor who does his homework and he’s probably got something on the other side of this, adds Tim Seymour. I think this may be a place where investors want to coat tail.

* On March 24th Lions Gate vice chairman Michael Burns and Icahn went head to head right here on Fast Money. Click here to see the heated and widely reported exchange.


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Trader disclosure: On June 28, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour owns (INTC); Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC), (MSFT); Adami’s wife works at Merck; Terranova owns (IPSU), (BX), (AGU), (PFE), (TER), (GMCR), (RSX), (TER), (AXP), (KO), (KR), (COST), (AMZN), (TEVA), (BMO), (DIS), (XCO), (SWN), (GMCR), (IPI), (SU), (XOM), (RDS.A), (COP), (OXY), (V), (FXB): Terranova owns (GLD) July 120 puts; Kelly owns (BP) puts; Kelly owns (FCX) puts; Kelly owns (GLD); Kelly owns (GDXJ); Kelly is short (GS); Jon Najarian owns (AAPL) call spreads; Jon Najarian owns (MU) call spreads; Jon Najarian owns (SNDK) call spreads; Jon Najarian owns a seat and stock in (CME); Jon Najarian owns a seat and stock in (CBOE); Jon Najarian owns a seat and stock in (NYX)

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