Carl Icahn is left holding a lot less than he had hoped.
In a blow to the billionaire corporate raider's hostile takeover bid for Lionsgate, a New York State Supreme Court denied an injunction that would have weakened a rival investor's hand before a key leadership vote next week.
Icahn has been trying to prevent shareholder Mark Rachesky from voting shares he gained from a controversial debt for equity swap at the studio's annual meeting on Dec. 14.
That move reduced Icahn's stake in Lionsgate from 38 percent to 33 percent. He remains the company's largest shareholder. Icahn had hoped that by reducing Rachesky's stake, he could strengthen his own position in the company.
"The Icahn Group has not made an actual showing that it would be irreparably and inequitably harmed by the denial of the preliminary injunction. Control of the company shares is a 'moving target'” Justice James Yates wrote in his decision on Thursday. "The balance of power in this and future proxy fights rests with the uncommitted votes."
Earlier, Icahn said that he could only prevail in next week's vote if the New York court granted his injunction.
"That case is critical," Icahn told the Los Angeles Time this week. "If you do the numbers, it’s almost impossible for us to win the proxy vote unless we win this court case."
A spokesperson for the Icahn Group did not immediately respond to TheWrap's request for comment.
Icahn has been involved in a year-long proxy fight for control of the Vancouver based studio, and is seeking to oust Lionsgate's leadership and stock its board with his own slate of directors.
The five nominees that shareholders are scheduled to vote on include former Overture chief Chris McGurk, former film executive Jay Firestone, former music executive Michael Dornemann, lawyer Daniel A. Ninivaggi and Harold T. Shapiro, the former president of Princeton.
"Denial of the preliminary injunction at this time will permit existing shareholders to vote on December 14 while giving Icahn, if he loses the proxy fight on that day, and should he prevail in the ensuing litigation, an opportunity for a new election," Yates wrote.
So crucial did Icahn view the court's decision to his bid for control of Lionsgate, that he made his latest $7.50 per-share tender offer contingent on the outcome of the injunction.
Icahn lost an earlier legal bid to overturn the stock swap in British Columbia court.
As the critical vote draws near, Icahn has campaigned aggressively to replace Lionsgate's leadership. On Monday, he launched SaveLionsGate.com, which discloses portions of private, potentially embarassing e-mails and texts between Lionsgate executives Mark Rachesky and Michael Burns on the studio’s strategy to thwart the takeover.
Moreover, he has spent the better part of Thursday trumpeting a shareholder advisory firm's endorsement of three of his nominees.
