Lionsgate Files Suit Against Icahn

SANTA MONICA/VANCOUVER: Lionsgate, alleging that the Carl Icahn is playing a "double game" by reversing his position on a merger with MGM, has filed suit against the billionaire financier.

The independent studio, in its court filing, notes that in March of this year, Icahn embarked on a takeover attempt largely because he took issue with Lionsgate’s desire to acquire MGM—a move he said would end in "oblivion" and "bankruptcy." The filing continues, "It turns out Icahn has been misleading Lionsgate and its shareholders all along. While urging Lionsgate shareholders to support his takeover campaign…to ensure that Lionsgate did not pursue a ‘delusional’ MGM transaction, Icahn was quietly amassing a huge position in MGM debt with the undisclosed intention of reaping profits from both sides in an eventual merger." Icahn is now "aggressively promoting" a Lionsgate/MGM combination, Lionsgate says. (Icahn is offering to buy up an additional $1.6 billion in MGM debt in order to secure enough votes against an MGM/Spyglass proposal.)

The court filing adds, "Icahn was playing a double game." Citing a range of SEC violations, Lionsgate says it is seeking "preliminary and permanent injunctive relief on behalf of itself and its shareholders and money damages compensating it for the Icahn Group’s tortious interference in its prospective business relations with potential merger partners."

Icahn holds about 33 percent of Lionsgate currently. He has extended his tender offer for additional shares (at $7.50 each) to November 12. In a statement, Icahn Group called the Lionsgate suit "completely without merit."