Image to consider offer from Lions Gate

Target contends company is worth more than bid Shares skyrocket 47 per cent on Nasdaq Stock Market

PHILADELPHIA— DVD and compact disc producer Image Entertainment Inc. says it will consider an unsolicited takeover bid from Lions Gate Entertainment Corp., one of Hollywood’s largest independent film studios. Image, which licenses and makes DVDs and CDs sold at major United States retailers, said in a written statement yesterday that the company was not for sale and contended that the firm is worth more than the Lions Gate offer. But a special committee of directors will study the proposal.

In an Aug. 30 letter to Image chairman and chief executive officer Martin Greenwald, Lions Gate chief executive Jon Feltheimer offered to swap 0.38 to 0.42 of a Lions Gate share for each share of Image. Image shares zoomed 47 per cent or $ 1.42 ( U. S.) to $ 4.42 on the Nasdaq Stock Market yesterday. Lions Gate shares fell more than 2 per cent or 25 cents to $ 10.15 on the New York Stock Exchange. On the Toronto Stock Exchange, Lions Gate fell less than 2 per cent or 19 cents ( Canadian) to $ 12.02.

Lions Gate already owns about 4 million shares of Image, or about 19 per cent of the company.

Lions Gate, which is based in British Columbia but has offices in Santa Monica, Calif., is known for low-budget arthouse and horror movies. Lions Gate has released films including Fahrenheit 9/ 11

and has a film library of 8,000 titles, including the popular Dirty Dancing. The company announced plans last year to make acquisitions.

Lions Gate was interested in the depth of the target’s library of programs and films and growing music business, Image said. The company said it would give Lions Gate’s proposal “ all the consideration that it deserves.”