| LOS ANGELES, March 19
LOS ANGELES, March 19 "The Hunger Games, a
post-apocalyptic movie about children forced into a fight to the
death, is expected to be one of the year's biggest hits. That
would deliver a massive windfall for Lions Gate Entertainment
But Carl Icahn, for one, may give the movie a pass. The
76-year old activist investor lost out on a $273 million
profit when he sold his 33 percent of Lions Gate last year
after waging an unsuccessful two-year takeover battle.
The billionaire decided on Aug. 30, 2011 to sell his 44
million shares for $7 apiece in separate deals to Lions Gate
board member Mark Rachesky, and via a public offering in
Boosted by "Hunger Games" anticipation, those shares have
sky-rocketed to $13.21 apiece as of its March 16 close. The
movie is expected to open with ticket sales of $70 million over
its first weekend, according to industry tracking.
"We made $2.5 billion last year for our investors," Icahn
told Reuters in a telephone interview. "You never want to get
out early, but we did pretty well."
Icahn said he "made a few dollars" on his Lions gate stock,
for which he received $309 million. In a statement at the time
of the transaction, the studio said the price "was approximately
the same as Icahn's cost basis."
Lions Gate had no comment beyond its statement.
Icahn, who made his name taking stakes and then forcing
changes by management, said he sold because the Lions Gate
holding didn't pencil out for him and his team.
"We're numbers guys and we added up all the liabilities and
the assets and we just couldn't see it going much higher than
where it was," he said. "The market has to be valuing Hunger
Games at $1.5 billion for it to be $14."
At the time Icahn got out of Lions Gate, investors thought
"Lions Gate" would gross about $100 million in ticket sales,
said James Marsh, a Piper Jaffray analyst who follows the stock.
"Now it's looking like a $300 million film, and that could
make it a $2 billion franchise."
Piper Jaffray was underwriter for Icahn's sale, according to
With 33 percent of Lion Gates stock, Icahn was unable to
force changes he wanted to make in the company, including
scaling back its overhead and selling off assets.
The roadblock was that 38 percent was held by allies of the
management: fund manager Capital Research Global Investors, and
Rachesky, who created his own investment funds in 1996 after
working as Icahn's lieutenant for two years.
"There was never an easy way for him to get out of the stock
at that point," said Marsh. "He was blocked from doing what he
does. If he had stayed in, he risked a style drift. Investors
don't like when you don't stick to your strategy."
After Icahn's sale, the stock began to climb and by Dec. 30
was trading at $8.32. It got another bump in early January, when
Lions Gate bought Summit Entertainment in a $421 million deal
for stock and cash, a move that gave the company access to
Summit's "Twilight" vampire movies.