Lions Gate Entertainment Corp. shares jumped Tuesday after Carl Icahn raised his bid for the film studio.
The billionaire investor, who has been fighting with the studio for more than a year, raised his bid to $7.50 per share, up from $6.50. Earlier this year, he offered as much as $7 but failed to attract sufficient interest from Lions Gate investors to gain a controlling stake in the company. However, he is now the largest single investor.
The company, whose corporate headquarters are in Vancouver, British Columbia, but whose studio is in Santa Monica, said that it will consider whether to recommend that shareholders accept Icahn's latest bid. In the past it has rejected Icahn’s offers as insufficient.
Icahn warned that his new offer will only be valid if shares that the company issued last month to Lions Gate board member Mark Rachesky are rescinded or converted into nonvoting stock. That deal was part of a debt-for-equity swap intended to dilute Icahn’s stake in the company from 37.9 percent to 33.5 percent.
“Given its recent decision to issue shares to an insider (Rachesky) at $6.20 per share without conducting a market check, we would normally expect that the board must recommend that shareholders accept our offer of $7.50 per share, but with this board anything is possible,” he said in a statement. Icahn also has petitioned the Supreme Court of British Columbia to reverse the debt swap.
Lions Gate shares were up 65 cents, or 10 percent, to $7.14 on the New York Stock Exchange after earlier in the session setting a new 52-week high of $7.40.
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