Lions Gate Entertainment Inc. late Tuesday said that activist investor Carl Icahn has agreed to end his nearly two-year-old takeover bid, selling substantially all of his investment firm’s shares in the studio and settling outstanding litigation.
The Santa Monica film and TV company, which has corporate headquarters in Vancouver, British Columbia, said that Icahn and his son Brett will sell up to 44.1 million shares at $7 per share. The settlement agreement calls for Lions Gate to buy roughly 11 million of those shares in a transaction expected to close by Friday.
Affiliates of MHR Fund Management LLC, an entity controlled by Lions Gate director Mark H. Rachesky, will purchase an additional 11 million shares. That will boost Rachesky’s stake to 51.2 million shares, making him the largest single investor. Over the next 35 business days, Lions Gate said it will make arrangement with other entities to purchase the remaining 22 million shares.
The purchase price is about 7 percent below Monday’s closing market price of $7.55. Lions Gate said the price is about the same as Icahn’s average cost for his 44 million shares, which were acquired over a period of months.
"We believe that this accretive and anti-dilutive transaction is in the best interests of all Lions Gate shareholders, and it allows the company to continue to focus on the execution of its long-term business plan," said Chief Executive Officer Jon Feltheimer in a statement.
Icahn dropped a $7.50-a-share tender offer last December after other investors turned down his slate of five board candidates. Icahn has since turned his interest to other companies where he sees opportunities, most recently acquiring a 7.6 percent stake in Oakland consumer products company Clorox Co.
"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," Icahn said in a statement.
Prior to the announcement, Lions Gate shares closed down 3 cents, or less than 1 percent, to $7.52 on the New York Stock Exchange. Shares fell 6 percent to $7.08 in after-market trading.
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