Analyst Research
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$20.0
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UPDATE 2-Lions Gate scores court victory in Icahn battle
* Judge denies Icahn motion to bar Rachesky voting stake
* Glass Lewis urges against Icahn's Lions Gate slate
* ISS supports 3 of Icahn's nominees (Adds court rulings, analysts, context, comments)
By Sue Zeidler
LOS ANGELES, Dec 9 (Reuters) - Lions Gate Entertainment (LGF.N) won a key court victory against hostile bidder Carl Icahn while investor advisory firms gave a mixed assessment of the proxy battle, with one urging full support of Icahn's slate, ahead of the company's annual meeting next week.
Three influential shareholder investor firms, Institutional Shareholder Services, Glass Lewis & Co, and Egan-Jones, took the studio's financial performance to task, but only one fully supported Icahn's five board nominees ahead of Lions Gate's annual meeting on Tuesday in Los Angeles.
Then late on Thursday, Lions Gate scored a major win when a New York judge denied a motion by Icahn, the company's largest shareholder, seeking an injunction to block Lions Gate's second largest shareholder Mark Rachesky, from voting shares he got in a debt-for-equity swap in July.
Icahn was not immediately available for comment.
Icahn, who has made a hostile $7.50-a-share takeover offer for Lions Gate, had sought to unwind the transaction that effectively diluted his stake from 38 percent to 33 percent.
Investors said the ruling would make it difficult for Icahn to put his five nominees on Lions Gate's board at the company's annual meeting on Tuesday.
"If the the transaction that the company did with Rachesky holds, there is no way he could win. My guess at this point is that Icahn's slate will be defeated because the insiders hold too big a block of the company," said Richard Dorfman, managing director of investment firm Richard Alan Inc, which owns shares in Lions Gate.
Nevertheless, some analysts said Icahn may still have scored some points with institutional investors due to the reports issued by proxy advisory firms, which took the company's financial performance to task.
Proxy advisory Glass Lewis & Co urged shareholders to reject Icahn's slate, saying the billionaire lacked a clear plan to revive the company, but cited the company's cumulative net loss of about $274.6 million for the five fiscal years ended March 31, 2010 and also gave it a poor grade for executive compensation, saying its paid more than its peers but performed moderately worse than its peers.
Egan-Jones urged full support for Icahn's slate, while ISS supported three of Icahn's five nominees, saying its performance over the past five years underscores doubts about its pace toward profitability.
"I think it will be close. It would be a minor victory for Icahn if he gets three of his nominees elected, although three out of 12 board members would not result in a major game changer for the company," said David Bank, analyst with RBC Capital Markets.
(Reporting by Susan Zeidler; Editing by Derek Caney, Bernard Orr)
