Tuesday, 20 July 2010

Hollywood Babble On & On #558: Magnificent Bastard Award!

Welcome to the show folks...

Today is a rare event, a time when I have to acknowledge someone's clever maneuvering, and present them with the rarest of honors. Yes it's time for me to present....

Today's Magnificent Bastard shows that sometimes when you're in the middle of a fight you can sing give peace a chance and then use it to sucker punch your opponent.

Today's Magnificent Bastard is...

10 days ago the takeover maven and Lionsgate's management called a truce in their long fight for control of the mini-major, saying that they were going to look into "merger & acquisitions" opportunities together. It was then reported that Lionsgate was looking into merging/acquiring that black hole of debt once called MGM.

Suddenly Lionsgate's share value took a dive, the truce expired and Icahn made a new offer of $6.50 a share. 50¢/share lower than his recent $7.00/share tender offer, and in comparison to the wobbly share price, it looks pretty reasonable. At first Lionsgate tried to sound even handed over this development, but meanwhile they were leaping head-first into a seemingly desperate stock dilution plan, where they trade debt for stock, in order to whittle down Icahn's stake from 37+% of the company to approximately 33%. Now I'm no financial law expert, but I'm pretty sure Icahn's lawyers are currently looking for ways to use it to screw this plan by Lionsgate's management, either through getting it tossed by regulators, or goading other shareholders to sell out before their own holdings get further diluted and ultimately devalued to nothing.

So Carl, you managed to use the egos of Lionsgate's management to drive down the share price, increase discontent among the shareholders who aren't part of the ruling inner circle with share dilution schemes, and set up a situation for you to buy more shares at a lower price, do you have anything to say about being getting this blog's coveted official Magnificent Bastard Award.
Well, since it looks like you're heading for a real battle, all I can say to both sides is to at least try to keep the company in one piece. The film business can't afford to lose a viable competitor.

1 comment:

  1. Nice post. This is a side of the business that is rarely covered. I'd like to see more when it is appropriate.