Activist investor Carl Icahn has bowed out of a takeover battle for film studio and distributor Lions Gate Entertainment Corp. for now, allowing his bid to expire after failing to get a favourable court ruling.
A New York state court has ordered a trial on measures taken by the company to prevent takeovers and is requiring Lions Gate to hold an additional shareholder meeting next September following a ruling.
The original offer of $7.50 per share was conditional on an injunction preventing the voting of Lions Gate shares issued director Mark Rachesky at the 2010 annual shareholders meeting.
Mr. Rachesky now controls about 29 per cent of Lions Gate shares, slightly less than Mr. Icahn but up from less than 20 per cent before the swap.
Shareholders of Lions Gate were asked by executives of the film company this month to throw out documents they received from Icahn, who is trying to replace its board.
The company sent a letter to shareholders on Wednesday urging them to toss the documents into the trash, a relatively rare request in a proxy vote.
The move came days after Icahn launched a website called “Save Lions Gate,” which includes documents outlining his reasons for wanting to replace the company's board. Mr. Icahn has been bulking up his position in the boutique studio for more than a year in an attempt to acquire it.
Mr. Icahn and Lions Gate have been sparring since early 2009 after Mr. Icahn began adding to his holdings and pressing for greater control of the company. This spring, he successfully annulled a “poison pill” plan Lions Gate adopted to keep him from increasing his stake.
Lions Gate is based in Canada but operates out of California and is known for high-profile movies like the Saw horror franchise as well as television hits like Mad Men.