Icahn Boosts Lions Gate Stake to 9.2%, Buys at Three-Year Low

By Andy Fixmer and Michael White

Oct. 21 (Bloomberg) -- Billionaire Carl Icahn more than doubled his investment in Lions Gate Entertainment Corp., taking advantage of this month's plunge in the shares.

Icahn lifted his stake in the independent film studio to 9.2 percent from 3.7 percent, according to a regulatory filing yesterday. The most recent purchases, from Oct. 7 through yesterday, coincided with a three-year low in the shares.

The 72-year-old investor said he views Lions Gate as a bargain. He has held talks with Chief Executive Officer Jon Feltheimer and Vice Chairman Michael Burns, and plans additional discussions. Icahn previously held 4.29 million shares of the studio, maker of the Academy Award winning film ``Crash'' and the ``Saw'' horror movies.

``Carl Icahn is one of the top 50 richest people in the world and he didn't get that way by being a bad investor,'' Burns said in an interview yesterday. ``He is constantly interested in increasing shareholder value, which would obviously include him.''

The latest purchases increase Icahn's holdings to 10.8 million shares, at a cost of $86.3 million. He has held Lions Gate for about three years, studio spokesman Peter Wilkes said in an interview. Icahn didn't return a phone message left with his office in New York.

Lions Gate, based in Vancouver and run from Santa Monica, California, climbed 8 percent to $7.96 in extended trading after the filing was made public. The shares rose 42 cents to $7.37 yesterday in New York Stock Exchange composite trading and have declined 22 percent this year.

`Opportunistic'

``They're sitting on a pile of cash, and the stock has been pretty badly beaten up, so one has to wonder if he's seeking some change in the status quo,'' said David Bank, an analyst at RBC Capital Markets in New York. ``Because he's been there so long, it seems like there's a pretty decent chance it's not much more than opportunistic.''

Bank rates the shares ``sector perform'' and doesn't own them. Lions Gate had $230.1 million in cash as of June 30, the company said in an Aug. 8 statement.

Icahn built his personal fortune, estimated at $12 billion by Forbes magazine, by investing in companies and pressuring management into selling at higher share prices.

In 2006, he coaxed Time Warner Inc. into buying back more stock, adding new directors and pledging $1 billion in cost cuts. This year, he pushed Motorola Inc. to split off its handset unit and tried to force Yahoo! Inc. Chief Executive Officer Jerry Yang to sell the Internet company to Microsoft Corp., threatening to oust the board.

Icahn this month started an organization, United Shareholders of America, to promote shareholder interests and strengthen board oversight of management.

To contact the reporters on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net; Michael White in Los Angeles at mwhite8@bloomberg.net