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14/10/2010

Lions Gate studio offer merger with MGM studios

NEW YORK (AFP) – Independent film studio Lions Gate on Tuesday said it had proposed a merger with rival MGM with the support of billionaire Carl Icahn who holds large stakes in both struggling companies.

In an official filing to US stock exchange authorities, Lions Gate said it had sent bankrupt Metro-Goldwyn-Mayer Studios an offer to merge into one company that would be held by Lions Gate shareholders and MGM creditors.

Last week, MGM announced a reorganization plan with Spyglass Entertainment, which was ready to swap MGM's more than four billion dollars in debt for 95 percent of shares of the world's biggest studios.

Under the proposal, Spyglass Entertainment founders Gary Barber and Roger Birnbaum would take over MGM's management once the studio emerges from bankruptcy.

Lions Gate said the merger proposal was sent "following detailed discussions" with Icahn, who preferred it to the offer by Spygalass.

"We believe that this combination of Lions Gate and MGM would enhance value for all constituencies and we believe this proposal as submitted is far better for MGM holders than the current proposal to combine MGM with Spyglass," Icahn said in a statement.

Lions Gate is home to successful TV series such as "Mad Men", "Nurse Jackie" and "Weeds", as well as recent action film "The Expendables".

Icahn, the largest shareholder in Lion Gate, has been leading a vocal battle against the studios second largest shareholder Mark Rachesky, a former adviser to Icahn.

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