The upshot of the so-called stockholder rights agreement that the company initiated today is that Rupert Murdoch can make it prohibitively expensive for someone he doesn’t like to buy News Corp‘s soon-to-be-created publishing company (which will retain the News Corp name) or the entertainment one (to be called 21st Century Fox). The terms enable either company to flood the market with shares, which News Corp investors as of June 21 can buy at half price, if a hostile bidder acquires 15% of the stock. Murdoch also can buy shares to keep his voting stake at about 40%. News Corp says that the anti-takeover plan — popularly known as a “poison pill” — is “intended to protect the stockholders” from a move that directors of either new company deem to be “not in the best interests of the companies and their respective stockholders.” But it leaves open the possibility of a “merger, tender or exchange offer or other business transaction approved by either the Board of Directors.” In adopting the poison pill, Murdoch no doubt wanted to avoid a rerun of his 2004 run-in with John Malone. The Liberty Media Chairman seized an opportunity to raise his stake in News Corp from 9% to 16% when it reincorporated to the U.S. from Australia. Two years later, Malone agreed to turn over his News Corp shares in return for 38.5% of DirecTV, $550M in cash, and three regional sports networks.
UPDATED: What came out of the 10-day cease fire between Carl Icahn and Lionsgate management? An offer by Icahn to buy the company for $6.50 a share. Considering that Icahn acquired over 30% of the company by offering $7 per share — Lionsgate management called that sum inadequate and urged shareholders to reject it — it seems unlikely this will lead to a deal.
Icahn’s firm said today there were no immediate opportunities that justified extending the “standstill period,” though it said discussions about a potential acquisition may continue in the future. Icahn’s side also reiterated that it intends to replace all or most of Lionsgate’s board of directors. The firm said recent actions taken by the company, like its adoption of a second poison pill measure after a previous one was struck down by Canadian regulators, convinced the firm that “it is extremely unlikely that the current management and board of directors of Lionsgate will allow shareholders of Lionsgate to make their own determination on the future path of the company, including decisions to make a major acquisition.”
Here’s the release just issued by Lionsgate and Icahn’s statement:
SANTA MONICA, CA, and VANCOUVER, BC, July 20, 2010 — Lionsgate today announced that it has received an unsolicited tender offer from Carl Icahn to acquire up to all of the common shares of Lionsgate for US$6.50 per share in cash. The offer is scheduled to expire at 8:00 p.m., New York City time, on August 25, 2010, unless extended or
Welcome to the real-life game of Survivor: Wall Street. Lionsgate management tonight is trying to outwit, outplay, and outlast Carl Icahn before he effects a hostile takeover of the movie/TV studio for his son Brett. Lionsgate tonight announced it’s putting into place a “Shareholder Rights Plan” — i.e. a poison pill defense — to cap Icahn at 38% of its stock (he is currently at 37.9%) so he can’t do a “creeping bid” through open market purchases like he did today or private market transactions. ”If he wants control of the Company, he should make a bid that is fair to all shareholders along the lines of a permitted bid described in the press release below,” a studio insider tells me.
Today, Icahn’s stake rose to 37.9%, or 44.8M shares, of Lionsgate. With 12+% more stock, he can become its majority stockholder. And then Lionsgate’s 12-member board, and the studio’s management team of Jon Feltheimer and Michael Burns, all have a target on their backs. Icahn’s $7 a share tender offer expired at midnight Wednesday, and left him with a 33.9% stake in Lionsgate. (Icahn Now Owns 33.9% Of Lionsgate) Today, he acquired an additional 4% more of the company by buying on the open market. Lionsgate’s immediate reaction was effectively to enact a poison pill defense. But it enacted a poison pill months ago — to prevent Icahn from accumulating over 20% of Lionsgate stock through his tender offer — and Canadian regulators nixed that measure. Can that happen again?
Here is tonight’s Lionsgate statement:
SANTA MONICA, Calif., and VANCOUVER, British Columbia, July 1, 2010 — Lionsgate (the “Company”) today announced that its Board of Directors has adopted a Shareholder Rights Plan that is designed to encourage the fair and equal treatment of Lionsgate’s shareholders in connection with any initiative to acquire effective control of the Company.