"The Icahn Group has determined, in order to protect the large position it now holds, that it is necessary to gain control of Lions Gate and remove the current board," the statement noted.
The Icahn Group's offer, which aims to gain at least a 50.1% controlling interest, expires on Oct. 22, and is not subject to any financing conditions. It is, however, subject to other conditions, namely relating to a recent a debt-to-equity transaction that gave board member and large shareholder Mark Rachesky additional shares. Icahn conditions his offer with either rescinding the Rachesky deal prior the expiry date or converting those shares to nonvoting stock.
The debt-to-equity transaction, which was took place July 20, increased Rachesky's stake in the Vancouver, B.C.-based entertainment company to nearly 29%, while diluting Icahn's stake to 33.5% from almost 38%, according to the Associated Press. Icahn has contested the transaction in the Supreme Court of British Columbia.
Rival shareholder Rachesky actually used to work for Icahn, in positions including senior investment officer and chief investment adviser at Icahn Holding Corporation, as Business Insider notes. The younger protege left Icahn in 1996 and opened his own New York-based firm, MHR Fund Management.
Following the details and legalities, Icahn proceeds with a long j'accuse statement -- as is customary for the activist investor -- in which he explains part of his reasoning for wanting to take control of the studio:
Lions Gate's latest actions (including the recent implementation of a second poison pill ...) have increased the Icahn Group's concern that the directors are no longer acting as fiduciaries.
Given its recent decision to issue shares to an insider 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. The Icahn Group believes that this board will stop at almost nothing to entrench its position at the expense of shareholders.