Lions Gate Entertainment, the embattled studio under siege from dissident investor Carl Icahn, has been holding merger discussions with the management of Metro Goldwyn Mayer, according to people close to the situation.

The talks, if successful, could result in a powerful independent studio with a library of thousands of movies and television shows that would be run by Lions Gate’s management team.

Sources said that Lions Gate Chief Executive Jon Feltheimer and Vice Chairman Michael Burns are pursuing a merger with MGM in order fend off a takeover attempt by Icahn, who has accumulated nearly one-third of Lions Gate’s stock and has threatened to wage a proxy war.

Such a transaction would face significant hurdles. Lions Gate would have to win Icahn’s approval, which it could possibly do by granting him board seats as part of a settlement to stave off his proxy war. Icahn opposed a $1.4-billion offer by Lions Gate to acquire MGM earlier this year.

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