The largest and most troublesome shareholder of Lionsgate Entertainment, Carl Icahn, has agreed to sell nearly all of his stock in the company. Both sides have also agreed to dismiss their lawsuits against each other.
Icahn failed last year in his attempt to elect a dissident slate to the Lionsgate board of directors. He had earlier dropped a bid to buy out other shareholders at $7.50 per share – a buyout which had been opposed by Lionsgate’s board and management.
Now Icahn has agreed to sell over 44 million shares to the company or its designees at $7.00 each. Icahn is keeping a small stake (1.2 million shares) for tax purposes and will reportedly break even on the sale of the 44 million shares. The settlement agreement requires him to abstain from voting his shares in the election of directors at Lionsgate’s annual shareholders meeting September 13th. He’s also agreed not to bring any proposal before the meeting.
Lionsgate itself is buying over 11 million shares from Icahn. MHR Fund Management, which is controlled by Lionsgate director Mark Rachesky, is buying over 11 million and Lionsgate has the right to designate buyers within 35 days for the other 22 million shares. The sales to Lionsgate and MHR are due to close by Friday (9/2).
The company made a point of noting that the $7.00 per share being paid to Icahn was 7% below Friday’s (8/26) closing price of $7.55. The stock closed Tuesday (8/30) at $7.52 after the settlement was announced.
Lionsgate is a producer and distributor of TV programs and films.