Carl Icahn Backs Lions Gate’s Proposed Merger With MGM

Corporate raider with eyes on indie studio owns stock in both

Lions Gate Entertainment proposed a merger with Metro-Goldwyn-Mayer late Monday, in a deal that would bring the indie studio together with MGM’s extensive film library — and be alternative to a proposed merger between MGM and Spyglass already on the table.

Carl Icahn, the corporate raider who has tried for months to wrangle control of Lions Gate — and who owns stock in both — said on Tuesday that he supports the studio merger.

Lions Gate's proposal would give MGM lenders a 55 percent stake in the merged company. 

MGM's current bankruptcy plan “calls for Spyglass Entertainment principals Gary Barber and Roger Birnbaum to take over the management of the studio along with a minority ownership stake.” Votes on that plan — which would need to be approved by about 100 MGM lenders — are due October 22.

Icahn’s current offer to buy all outstanding shares of Lions Gate common stock at $7.50 per share is also set to expire on Oct. 22.

"We believe that this combination of Lions Gate and MGM would enhance value for all constituencies and we believe this proposal as submitted is far better for MGM holders than the current proposal to combine MGM with Spyglass,” Icahn said in a statement. “In addition, we also believe such a combination transaction would enhance the value of Lions Gate shares.”

Icahn, who is currently embroiled with a lawsuit against Lions Gate in Canada, said he would support a merger with MGM regardless of the case’s outcome.

“However, we intend to continue to pursue our lawsuits regarding Lions Gate's recent dilutive transaction with Mark Rachesky,” Icahn continued. “Whether or not we prevail in those lawsuits, we intend to continue to support a combination of Lions Gate and MGM. Our support for this combination is conditioned on the combined company having satisfactory corporate governance provisions."

This isn't the first time Lions Gate has tried to deal for MGM. In March, the indie studio dropped its bid — said to be between $1.3 billion and $1.4 billion — for the company. At the time, MGM, which had been asking $2 billion, indicated that the offer was insufficient. Lions Gate was unwilling to up its bid and essentially dropped out.

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