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Lionsgate on Friday said it has reached a tentative $92.5 million settlement deal to end a class action suit brought by former Starz shareholders over its $4.4 billion merger with the premium cable channel in 2016.
The studio in an SEC filing said both parties in the legal action against Lionsgate — former members of the Starz boardroom and billionaire investor John Malone — on Aug. 22 reached an agreement in principle that would see the litigation dismissed in return for the settlement payment.
The Delaware Chancery Court must approve the settlement payment to end the litigation related to Lionsgate’s takeover of Starz in December 2016. In all, seven separate class action lawsuits brought by disgruntled Starz stockholders against Lionsgate and other parties involved in its Starz merger were consolidated into one legal action.
The suit implicated Malone for allegedly orchestrating the sale of Starz while standing on both sides of the transaction due to a series of share swap deals. The Starz deal legal action has implications for other top Hollywood execs being cited by investors for executing lucrative side deals in connection with mergers during the current industry consolidation.
In the wake of the Starz deal, another SEC filing revealed Malone backed Lionsgate in its takeover bid for the cable premium channel against at least two other rival bids. The regulatory document revealed Malone was key to swaying the Starz boardroom and outside advisers to get behind the eventual merger deal with Lionsgate.
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