Lions Gate Wins Image Suit

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Lions Gate Entertainment Co. said Tuesday that it has won a lawsuit that will require DVD distributor Image Entertainment Inc. to put all six seats on its board up for election at this year’s annual meeting in October.


A Delaware judge sided with Vancouver, B.C.-based Lions Gate, which has significant operations in Santa Monica and owns 18.94 percent of Image Entertainment’s shares. The independent movie studio earlier said that it had lost confidence in Chatsworth-based Image Entertainment board’s “ability and desire to maximize stockholder value,” and may run a slate of candidates for the board.


The ruling is seen as boost for Lions Gate’s takeover bid of Image Entertainment, which owns an extensive TV and film library. Lions Gate last fall offered to buy the company for $4-a-share, but Image’s board said the price was inadequate.


Shares of Image Entertainment were up 3.3 percent to 3.76 in late trading Tuesday.


Image Entertainment changed its corporate bylaws to allow for staggered elections so that only a few seats on its board would be up for election at the 2006 annual meeting, Lions Gate said in the suit. Chancellor William B. Chandler III of Delaware’s Court of Chancery ruled that the change cannot take place this year, in part because Image Entertainment couldn’t prove what its shareholders could understood from the corporate documents.


An Image Entertainment spokesman declined to comment on the ruling.

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