UPDATE 3-Icahn launches offer to up stake in Lions Gate
* Icahn tenders for 10 pct or 13.2 mln Lions Gate shares
* Tender would put Icahn holdings at 29.9 percent
* Offers $6 cash per share
* Lions Gate shares end up 4.6 percent
* Lions Gate says board to review proposal (Adds Lions Gate statement, background, byline)
By Sue Zeidler
LOS ANGELES, Feb 16 (Reuters) - Billionaire financier Carl Icahn on Tuesday said he would tender for more shares of Lions Gate Entertainment Corp (LGF.N), in a move seen aimed at curbing potential purchases of studios like Miramax or Metro-Goldwyn-Mayer.
Sources have listed Lions Gate as among interested parties for Walt Disney Co's (DIS.N) Miramax or troubled studio Metro-Goldwyn-Mayer [MGMYR.UL].
And last week, Lions Gate management told analysts that Miramax fits into its criteria for acquisitions.
Icahn, who has amassed Lions Gate shares since 2005 and holds an 18.9 percent stake in it, will become its largest shareholder if the tender is successful. In the past, he has blasted the studio, home to "Mad Men" and the "Saw" franchise, for overspending on acquisitions such as the TV Guide channel.
Icahn said in a statement the offer was conditional on Lions Gate not entering into any material transaction outside of the ordinary course of business.
"We believe Icahn could be trying to prevent Lions Gate from moving further in its attempts to acquire either Miramax and/or MGM," said David Bank, analyst with RBC Capital Markets.
The activist shareholder said he planned to tender for an additional 10 percent, or 13.2 million, of Lions Gate shares at $6 apiece, bringing his slice of the company to 29.9 percent.
Lions Gate's stock rose nearly 5 percent as Icahn offered a 15 percent premium to its closing price of $5.23 on Feb. 12.
The company said it will review Icahn's proposal and make its recommendation to shareholders promptly. Morgan Stanley is serving as the company's financial adviser.
Lions Gate has said that if Icahn acquired more than 20 percent of the company, that might constitute a change in control of the business.
A change in control, in turn, could trigger a default in the studio's bank credit facility, accelerating payment obligations that analysts peg at about $340 million. But analysts said any such move could be avoided should creditors waive their rights.
Some investors also believe that Icahn could be attempting to push Lions Gate itself onto the sales block.
"This is the first step in the dance of either Icahn acquiring Lions Gate or, more likely, the company being put up for sale. It is Icahn's attempt to thwart Lions Gate's efforts to be an acquirer in the case of Miramax," said Richard Dorfman, managing director of investment firm Richard Alan Inc, which owns Lions Gate shares.
"If successful, he would completely replace management and the board."
TALKS BREAK DOWN
Lions Gate's largest stakeholder is Icahn's former investment chief, Mark Rachesky, whose MHR Fund Management controls more than 19 percent of the company's shares. Rachesky has said he supports the company's management and has a seat on Lions Gate board.
Talks between Lions Gate and Icahn aimed at giving the billionaire a seat or two on the board broke down in March 2009. In April, Icahn launched a tender for $324 million of convertible notes issued by the studio, in hope of converting them to equity to raise his stake to 29 percent. But that effort was unsuccessful.
Icahn criticized Lions Gate for overspending and said that Lions Gate's acquisition of TV Guide for $255 million bordered on "recklessness."
In May 2009, Lions Gate agreed to sell a 49 percent stake in TV Guide for about $123 million.
Lions Gate last year also assembled an advisory defense team including Morgan Stanley and the law firm of Wachtell, Lipton, Rosen and Katz to launch a defense against Icahn.
A source familiar with the matter said the team was mulling various alternatives and would need to fully study the tender offer to determine its next move.
Shares of Lions Gate closed up 4.8 percent at $5.48 on the New York Stock Exchange. (Editing by Richard Chang and Steve Orlofsky)
