Lionsgate seems to have caved to Carl Icahn’s demands and may soon give him one or two seats on its 12-member board a “Hollywood executive” told The Hollywood Reporter.
THR: The company that produces the popular “Mad Men” cable TV show and “Saw” film franchise is negotiating to give Icahn one or two seats on its 12-member board, said a Hollywood executive who spoke on condition of anonymity.
The executive believed Icahn wants to install his son Brett on the board, but noted that the private talks — aimed at avoiding a hostile proxy battle — could break down over the issue of how many seats Icahn would get…
[Carl] is the third-largest investor in Lionsgate with a 14.5 per cent stake, his former investment chief Mark Rachesky’s MHR Fund Management has 19.4 per cent and Steinberg Asset Management has 14.6 per cent.
Just last week, Lionsgate’s vice chairman Michael Burns said he wouldn’t commit to giving Icahn any of the board seats he requested, so the studio has apparently changed its mind as the activist investor continued scooping up its stock.
It’s expected that Icahn will either advocate for a sale of the studio or its valuable 8,000-film library. The library generates $275 million in annual revenue and $100 million in free cash flow, THR says, and a sale of this asset for an attractive price—instead of the whole studio—seems more likely in this economy.
“My sense since the first day that Icahn became involved was that he ultimately wanted to see some type of transaction occur,” said Richard Dorfman, managing director of investment firm Richard Alan Inc, which owns shares in Lions Gate. “The question is whether or not it would be difficult to sell Lionsgate outright at an attractive value in this environment.”…
“There’s a lot of value for someone like Rupert Murdoch or a company like Yahoo who can monetise the library online,” Dorfman said.
THR also devotes a significant part of its story to discussing Icahn’s potential interest in MGM, which has been rumoured since last week. But despire numerous reports that Icahn may want to merge the two studios, no one has confirmed that Icahn is buying MGM’s debt, and since it’s privately held, only Icahn or MGM’s board members, who would have to approve the purchase, could confirm that.
Icahn has long been interested in MGM, criticising Time Warner for failing to buy the studio’s library several years ago, but rumours of a combination between the two lions have been floating around Hollywood for the past four years, at least. Lionsgate also just completed an acquisition of the TV Guide channel, so we doubt they would want to do another merger so soon.
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