Lions Gate Entertainment Corporation (LGF) disclosed on Friday that billionaire investor Carl Icahn has launched a hostile bid to acquire all the outstanding shares of the movie studio for $6.00 a share in cash. The company said that it will review the offer and inform shareholders accordingly.

A similar priced offer was made by Carl Icahn earlier to increase his minority stake to 29.9% from 18.9%, which was turned down by the Board of Lions Gate.

Carl Icahn has not sweetened the offer he had made earlier. So there is speculation that the offer may not receive an enthusiastic response from the shareholders. However, analysts view that the bid to acquire Lions Gate is to pre-empt the company from bidding for Metro-Goldwyn-Mayer (MGM) and its film library.

Carl Icahn remained skeptic about Lions Gate’s decision to bid for MGM and the library of older titles, amid shrinking DVD sales as more and more people are streaming the Internet for entertainment. Carl Icahn also seeks changes in top management.

However, Lions Gate notified shareholders that a change in control could trigger a technical default of an outstanding debt amounting to $516 million. To alleviate such issues, Carl Icahn said any debt maturity arising from a change in top management will be financed through a bridge loan until new financing is raised.

Lions Gate is a film studio which produces and distributes motion pictures for theatrical and straight-to-video release, and television programming for the cable and broadcast networks.

Read the full analyst report on “LGF”
Zacks Investment Research