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Friday, July 2, 2010

Lions Gate adopts 'Poison Pill' to Thwart Icahn

Associated Press

NEW YORK — Boutique film studio Lions Gate Entertainment Corp. has adopted a shareholder rights plan, also known as a "poison pill," to prevent hostile takeover attempts such as the one billionaire investor Carl Icahn is conducting.

The plan, announced late Thursday, would let shareholders buy extra shares at a deep discount. The right doesn't apply to any shareholder attempting to take control of the company. If exercised, the plan would dilute the stake of any potential acquirer.

Lions Gate has been battling Icahn for a year, and it's not the first time it has attempted to put a poison pill in place. The British Columbia Securities Commission voided an earlier plan in April, saying the new shares could not be traded.

Lions Gate, based in Vancouver but operated out of Santa Monica, Calif., falls under the jurisdiction of the Canadian province of British Columbia.

On Thursday, Icahn said he had gained 33.9 percent of Lions Gate shares through a tender offer. That leaves him short of a controlling interest, but he can block decisions that require a two-thirds shareholder vote.

Investors appear to be betting on a higher bid, though Icahn has said that he will not raise his offer. The stock closed at $7.15 on Thursday, 15 cents above Icahn's tender offer.