Lionsgate Entertainment has sued its largest shareholder, Carl Icahn, charging that he has played a “double game” by secretly plotting to merge Lionsgate and MGM while publicly fighting the idea – until reversing course. Icahn says the suit is “without merit” and is continuing his bid to take over Lionsgate.
Icahn and Lionsgate’s management and board have tangled repeatedly in recent months. But they have recently been on the same team in one regard: The launch of a bid to have Lionsgate merge with MGM and thwart a Chapter 11 plan which would have MGM run by Spyglass Entertainment.
But that agreement unraveled last week as Icahn switched sides and voted for the Spyglass deal, which has been approved by more than half of MGM’s creditors, reportedly in exchange for representation on the new board. That’s likely to spark additional legal claims by Lionsgate.
Lionsgate had charged in its lawsuit that Icahn had been double dealing for months, threatening to fight any attempt by Lionsgate to acquire another studio, while he was actually buying up a huge amount of MGM’s debt and increasing his Lionsgate stock holdings.
“Icahn opposed a merger with MGM not because it was bad for Lionsgate shareholders, but because it was good – so good, in fact, that he wanted to postpone it until he could buy as much of both companies as he could and thus extract for himself as much of the value stemming from the merger as possible,” Lionsgate charged in its lawsuit. The federal lawsuit filed in New York charges Icahn with violating US securities law and state tort law. It seeks unspecified damages and also wants the court to order Icahn to allow any shareholders who had given him their proxy the opportunity to rescind it after receiving a new disclosure to be filed with the SEC.
Icahn has basically ignored the claims, calling them “completely without merit.” His press release even included a link for viewing of the lawsuit against him.
Meanwhile, Icahn is pressing forward with his offer to purchase any and all Lionsgate shares for $7.50 each. The new deadline is November 12th.