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Icahn calls it a wrap on takeover of Lions Gate movie studio

Published: 12:22 31 Aug 2011 EDT

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Billionaire activist investor Carl Icahn Wednesday agreed to sell his stake in Lions Gate Entertainment (NYSE:LGF), ending his campaign to seize control of the Vancouver-headquartered studio behind the “Saw” movies and “Mad Men” TV show.

Icahn is now free to focus his efforts on his $10.4 billion hostile bid for consumer products company Clorox (NYSE:CLX), which was tabled last month.

Both Lions Gate and Icahn have also agreed to end litigation against each other. Icahn had alleged that board members were deliberately trying to block his takeover. 

Icahn said he will sell his one-third stake in Lions Gate that he has buit up since 2009 for $7 a share in three separate purchases over the next 35 days, roughly in line with Icahn's initial purchase price.

Icahn's interest in Lionsgate began in 2009, when he tried to shake up the studio board and install his son Brett Icahn at the head of the company. Late last year, Icahn also wanted the studio to merge with MGM, in which he holds around $500 million in corporate debt.

In a press release, Lionsgate said: "The parties also agreed to dismiss all outstanding litigation between them and release all claims that they may potentially have against each other."

Some Wall Street analysts have pointed out the timing of the sale of Icahn's stake may have been too early, since Lions Gate is planning to release the first part of best-selling teen trilogy “The Hunger Games” in March 2012. Investors have high hopes the new movie franchise may be as successful for Lions Gate as the "Harry Potter" movies have been for Warner Bros., part of Time Warner (NYSE:TWX).

As at 11.38 am EDT, shares in Lions Gate were trading down 6% at $7.07, Clorox was down 30 cents, or 0.42% at $70.22 and Time Warner was up 1.22% at $31.64.

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