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Gabourey Sidibe stars as Claireece Jones in Precious.

The directors of Lions Gate Entertainment Corp. could be forgiven if they forget their troubles Sunday night for a few hours. After all, the studio's Precious: Based on the Novel Push by Sapphire is nominated for six Oscars at the Academy Awards, including best picture.

The story of incest and poverty was one of the most talked-about films of the year. And the walk down the red carpet of its come-from-nowhere lead actress, Gabourey Sidibe, promises to be one of the event's most talked-about moments.

But far from the cameras and velvet ropes, Lions Gate is under siege. The money-losing film studio is locked in a fight with activist shareholder Carl Icahn. He has been scathing about the company's management, and last month he launched a tender offer to increase his stake in Lions Gate to nearly 30 per cent.

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The move, he says in documents filed with the U.S. Securities and Exchange Commission this week, is meant to increase his influence over Lions Gate's decisions and "protect" his investment.

The 74-year-old financier has long said the studio - responsible for the gory Saw horror franchise - needs to slash its overhead costs.

In his offer, Mr. Icahn slams Lions Gate's "ill-advised" merger and acquisition activities, including the $250-million (U.S.) purchase of the "distressed" TV Guide Network. In meetings with Lions Gate, he says he was critical of buying a channel with "significant exposure to advertising" amid a financial crisis, using too much of Lions Gate's available cash.

He is also lukewarm about, but not opposed to, Lions Gate's plans to acquire Metro-Goldwyn-Mayer Inc., about which he and Lions Gate held talks last year. (Lions Gate has also mused about buying Walt Disney Co.'s Miramax Films.)

Lions Gate grew dramatically in the past decade and is also behind TV successes Mad Men and Weeds . It lost $65.3-million in its last quarter, but says its outlook is improving.

It won't comment on the dispute with Mr. Icahn, but that situation has led to an interesting sideshow. Lions Gate is based in Vancouver, but does most of its business in Santa Monica, Calif. In his documents, Mr. Icahn says the company is trying to fend him off with plans to move out of Canada to the United States, where takeover rules are different. The company, he says, asked the B.C. Securities Commission to end its status as a "reporting issuer" in Canada.

The regulator confirms the company made that request last April, but that it later withdrew it. According to Mr. Icahn in his documents, however, Lions Gate vice-chairman Michael Burns raised the issue again in a meeting last month.

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Takeovers are generally easier in Canada, where regulators are reluctant to allow "poison pills" that thwart hostile bids. Mr. Icahn says he believes this is behind Lions Gate's plans.

Courts in Delaware, where many U.S. firms are incorporated and Lions Gate has a U.S. affiliate, are much easier places to fight takeovers. The main weapon is the poison pill, a contract triggered by a hostile bid that allows existing shareholders to buy new stock at rock-bottom prices. This makes any takeover much more expensive.

Neither Mr. Icahn's representatives nor Lions Gate would discuss the issue. Peter Wilkes, spokesman for Lions Gate in Santa Monica, said the company would formally respond to Mr. Icahn's offer soon. Under U.S. and Canadian securities laws, Lions Gate has until March 11.

In his offering document, though, Mr. Icahn says he sent a draft of the offer to Mr. Burns, who responded via e-mail that it "omits material facts."

Mr. Icahn's offer is conditional on Lions Gate avoiding major acquisitions of more than $100-million, and would see him pay a premium $6 a share to increase his stake to 29.9 per cent from the current 18.9 per cent, potentially spending about $79-million.

Edward Waitzer, a lawyer with Stikeman Elliott LLP in Toronto and the former chairman of the Ontario Securities Commission, said moving south of the border to avoid a takeover is virtually unheard of. Under securities laws, such moves could mean tax issues, large costs or even a shareholder vote, he said. And even after a firm skipped town, Canadian securities regulators and courts might still claim jurisdiction.

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"It would be unusual for somebody to be moving as a defensive tactic," Mr. Waitzer said. "There'd be more to it."

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