Activist investor Carl Icahn ended his three-year on-again off-again battle with Lionsgate, moving to sell his entire stake in the movie studio and production giant and drop all outstanding litigation against the company for about $309 million.
Based in Santa Monica, Calif. And Vancouver, B.C., Lionsgate is known for its box office hits like the Saw series as well as for producing several cable stalwarts like Mad Men, Weeds and Nurse Jackie.
Icahn, who made his fortune buying stock and debt from troubled companies, first began acquiring large blocks of Lionsgate shares in 2008, growing that stake through a series of tender offers to about 44.2 million, or 33.2% of its outstanding shares. Along the way Icahn has been a vocal critic of the company and its management, criticizing them for failed box office ventures, calling Lionsgate's 2009 purchase of TV Guide Network a mistake and attempting to merge the studio with his interests in rival MGM.
In a statement, Lionsgate said Icahn and his son Brett Icahn have agreed to sell up to 44.2 million shares of Lionsgate, representing substantially all of the shares in the studio owned by the Icahns in a series of transactions valued at about $309 million. In addition, the parties have agreed to dismiss all outstanding litigation between them and release all claims they may potentially have against each other.
Under terms of the agreement, a Lionsgate company has purchased 11 million shares of Lionsgate common stock from the Icahns for $7 per share in a deal to be completed by Sept.2. In addition one or more affiliates of MHR Fund Management, controlled by former Icahn protégé and current Lionsgate director Mark Rachesky, has purchased another 11 million shares at $7 each, also in a transaction that will be completed by Sept. 2. Over the next 35 business days, Lionsgate will have the right to designate one or more parti4es to purchase the remaining 22.1 million shares from the Icahns at $7 each. The purchase price is about 7% below Lionsgate's $7.52 share price on Tuesday and was about the same as Icahn's cost basis for the shares.
"We believe that this accretive and antidilutive transaction is in the best interests of all Lionsgate shareholders, and it allows the Company to continue to focus on the execution of its long-term business plan," said Lionsgate co-chairman and CEO Jon Feltheimer in a statement.
Icahn, who has been an outspoken critic of the company over the years, has since turned his eye to other industries. Most recently, he is embroiled in a proxy fight to oust the board of directors of household products giant Clorox.
"As some have noted, my own "slate" is pretty full at the time, and I therefore determined that it is a good time to exit," Icahn said in a statement.
Perella Weinberg Partners served as outside financial advisor and Wachtell, Lipton, Rosen & Katz and Heenan Blaikie LLP served as legal counsel to the board in connection with the transaction.