Icahns end takeover bid for Lionsgate, to sell shares to company and its allies

VANCOUVER – Carl and Brett Icahn have agreed to sell substantially all of their shares in Lions Gate Entertainment Corp, ending a months-long hostile takeover attempt, the movie and television company announced Tuesday.

Lionsgate (NYSE:LGF) has agreed to buy about US$77 million worth of the shares, or about one-quarter of the Icahns’ holdings, at $7 each – below the market price ahead of the announcement.

“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 long-term business plan,” said Jon Feltheimer, Lionsgate’s co-chairman and chief executive.

An equal number of shares will be purchased at the same price by a company controlled by Lionsgate director Mark Rachesky.

Lionsgate will also have the right to designate who buys the remaining 22 million shares being sold by the Icahns and both sides have agreed to drop litigation against each other.

The deal was announced as financial markets closed. Lionsgate stock ended the regular session at US$7.52 but dropped 52 cents in extended trading.

Icahn had announced in February 2010 that he wanted to increase his stake in Lionsgate to nearly 30 per cent, from 18.9 per cent. The company rejected his proposal and Icahn responded by seeking to take over Lionsgate.

The battle included a ruling by the B.C. Securities Commission, which invalidated the company’s poison-pill defence – a decision that was upheld by the province’s top court.

The two sides have been at odds for most of the past year year, with Icahn gradually increasing his holdings to about 44 million Lionsgate common shares – about 35 per cent of the total equity.