Lions Gate and Icahn sign 10-day truce to work on deals

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Lions Gate Entertainment and Carl Icahn are hitting the pause button on their battle for control of the movie and television production company to search for common ground on potential mergers and acquisitions.

The Santa Monica-based company and the activist investor, who now owns 38% of its stock, have reached a 10-day truce, according to a letter sent to Icahn by Lions Gate Vice Chairman Michael Burns on Friday.

After months of talks and public criticism, the two sides have been unable to agree on a settlement that would give Icahn representation and power on the company’s board of directors in exchange for his backing off his bid to take control of Lions Gate. Icahn has been particularly critical of spending habits at the studio.

However, Lions Gate executives are apparently hopeful they can convince Icahn to support one of the merger or acquisition possibilities that they have been pursuing. The studio has been holding merger discussions with the management of struggling Metro-Goldwyn-Mayer and previously discussed a deal with Summit Entertainment, the independent studio behind the ‘Twilight’ films. Lions Gate earlier this year looked into buying Miramax Films, but Walt Disney Co.'s independent label is now set to go to an investor group led by Ron Tutor.


Due to Icahn’s big stake, Lions Gate would need his support in any deal. Of course, if Lions Gate does make an acquisition, one result could be the reduction of Icahn’s holdings in the company.

A merger with MGM would be very complex, given that studio’s $4-billion debt, and there has been no indication that Lions Gate and Summit are close to a deal since the two engaged in talks in 2008.

At the end of the 10-day agreement, if it is not renewed, Lions Gate would disclose all of the information it shares with Icahn so that the investor doesn’t have non-public information that would prevent him from launching a new tender offer or going through with his planned proxy war to take over the studio’s board of directors.

-- Ben Fritz


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