4 p.m. UPDATE:
You didn't think Carl Icahn was going to rest at 33 percent of Lionsgate, did you?
The corporate raider upped his stake to 38 percent after picking up 4.64 million shares on the open market Thursday, his lawyer confirmed to TheWrap on Thursday.
The move doesn't change Icahn's options much — he triggered certain internal controls when he crossed the 33 percent threshold.
But it does put him incrimentally closer to the 51 percent he'd need to take over. Lionsgate brass, who have been fighting his efforts inch-by-inch, insist he's got no chance of doing that anytime soon.
Second update: By evening, Lionsgate announced that its board of directors had adopted a Shareholder Rights plan to "encourage the fair and equal treatment of shareholders" in connection with a takeover attempt.
The "rights plan" is clearly aimed at keeping Icahn from continuing to buy blocs of shares in fits and starts, by offering one price to a small group as he seeks to ratchet up control of the company. It restricts buying a controlling stake in Lionsgate through a more rigid "permitted bid" process, one that "treats shareholders equally and fairly," the company said.
EARLIER:
Carl Icahn has increased his stake in Lionsgate to 33.9 percent, after his $7 tender offer ended on Wednesday night.
The activist investor moved a step closer in his bid to wrest control of the beleaguered studio, as another 2.43 million shares moved into the Icahn Group's corner during the offer period from June 16 to June 30.
Icahn's 33 percent share is enough to trigger certain internal controls, giving him the ability to veto acquisitions and mergers. It also gives top executives such as Chief Executive Officer Jon Feltheimer an opportunity to exit the company with a multimillion dollar payout.
However, the company's top executives have pledged to stay on and fight Icahn's hostile takeover attempts.
One move that will defray Icahn's efforts to control the studio was a decision two weeks ago by Lionsgate to increase the "change of control trigger threshold" to in excess of 50 percent ownership of the company's equity. The threshold had previously been "in excess of 20 percent."
In a statement Thursday, Lionsgate thanked the 66 percent of shareholders that rejected Ichan's offer.
"Our focus continues to be running the business to build value for all of our shareholders," the studio said. "As reflected in our strong fiscal 2010 results, the Board believes that the best path for increasing the value of the company for the benefit of all shareholders is to continue executing Lionsgate’s growth strategy. We look forward to continuing to unlock the exceptional value within Lionsgate’s diversified portfolio of assets."
Icahn and his affiliates now own more than 40 million shares of the studio. The outspoken billionaire has criticized Lionsgate's management team for lacking vision and for failing to keep costs down.
The fight seems unlikely to end here. Icahn has pledged to engage in a proxy fight at the company's annual shareholders' meeting that is normally held in late summer.
Shares of Lionsgate rose 2.87 percent on the New York Stock Exchange to $7.18 following the news on Thursday morning.
