Carl Icahn Agrees to Sell Lionsgate Stake

1:46 PM PST 08/30/2011 by Etan Vlessing
Rick Maiman/Bloomberg/Getty Images
Carl Icahn

UPDATED: The announcement comes before the studio's annual shareholders meeting next month.

TORONTO -- Lionsgate looks to be free and clear of Carl Icahn after the billionaire investor agreed to sell his stake in the mini-major.

Lionsgate said Carl and Brett Icahn have waived a white flag and agreed to sell up to 44,161,971  shares of common stock in the company, or “substantially all” of the Lionsgate shares currently held by the Icahns.

“The parties also agreed to dismiss all outstanding litigation between them and release all claims that they may potentially have against each other,” Lionsgate continued in a statement.

STORY: Carl Icahn Picks Up More Lionsgate Stock

Icahn is calling an end to his battle with Lionsgate, which included a series of hostile takeover bids, with around 33 percent of its common stock in hand.

For his part, Carl Icahn dropped his usual snarling tone about Lionsgate’s management, and wished the company well as he bid adieu.

“As some have noted, my own “slate” is pretty full at the time, and I therefore determined that it is a good time to exit, he added.

STORY: Analysts Welcome Lionsgate Selling Maple Pictures to Alliance Films

The announcement, coming before Lionsgate’s annual shareholders meeting next month, added the settlement agreement includes the mini-major purchasing 11,040,493 shares of common stock from the Icahns at $7.00 per share in a transaction to be completed by September 2.

And MHR Fund Management LLC, an entity controlled by rival shareholder Mark Rachesky, who is also a director of Lionsgate, purchased another 11,040,493 shares of  common stock from the Icahns at $7.00 per share, also to be completed by September 2.

It was a 2010 debt-for-equity swap between Lionsgate and Rachesky that sunk Icahn’s bid to take control of the mini-major at last year’s annual shareholders meeting in Los Angeles.  

STORY: Court Dismisses Carl Icahn’s Complaint Against Lionsgate

Lionsgate had other victories as it managed to thwart Icahn’s persistent advances on the mini-major.

Lionsgate scored major court victories in the New York and British Columbia Supreme Courts as they threw out Icahn’s complaint against the indie studio over the controversial July 2010 debt-for-equity swap involving Rachesky.

Having failed to convince the courts that the indie studio had unlawfully thwarted his bid for control of the company with its July 2010 dealings, Icahn had little choice but to end his proxy fight with Lionsgate at last year’s AGM.

To finally exit the mini-major, Icahn has granted Liongate the right during the next 35 business days to choose one or more parties to purchase up to 22,080,985 additional shares of company stock from his holding, again $7.00 per share. 

The $7.00 purchase price amounts to Icahn's cost basis for the shares.

“We believe that this accretive and antidilutive transaction is in the best interests of all Lionsgate shareholders, and it allows the Company to continue to focus on the execution of its longterm business plan,” Lionsgate co-chairman and CEO Jon Feltheimer said in a statement. 

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