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Report: Icahn sheds MGM stake

by Lou Whiteman  |  Published August 1, 2012 at 10:33 AM
Billionaire investor Carl Icahn has reportedly shed his 25% stake in initial public offering candidate Metro-Goldwyn-Mayer Inc., abandoning his dream of combining the studio with a rival.

Icahn, who acquired his holding as part of a debt conversion following MGM's 2010 bankruptcy reorganization, according to the Los Angeles Times has sold the shares back to the company in a deal worth $590 million. The sale helps clear the path for an IPO of MGM, which owns a 50% stake in two potential fourth-quarter blockbusters: "The Hobbit: An Unexpected Journey" and "Skyfall," the 23rd installment of the James Bond 007 series.

Terms of the deal call for MGM to pay Icahn $33.50 per share for the holding, according to a confidential letter obtained by the Times, a premium of nearly 20% over MGM's share price on private markets. MGM parent MGM Holdings Inc. in late July filed a draft registration statement with the Securities and Exchange Commission ahead of a potential offering.

Neither the company nor Icahn offered any statement on the LA Times report, which suggested MGM might attempt a public offering before year's end.

Icahn's reported move follows the activist investor's October sale of his 33% stake in Lions Gate Entertainment Corp. after a proxy battle failed to unseat that studio's board. Icahn had hoped to merge MGM with Lions Gate, maker of Tyler Perry films and television's "Mad Men," but hit significant resistance from both parties.

MGM, which was drowning in debt stemming from its 2004 deal to be acquired by a consortium including Comcast Corp., Sony Corp. and private equity, instead went with a plan to file a prepackaged bankruptcy and install the co-leaders of mini-studio Spyglass Entertainment Holdings LLC to run the business.

Icahn in 2011 also made a run at bankrupt video retailer Blockbuster Inc. but lost out to Dish Network Corp., which acquired the firm for $320 million.
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Tags: bankruptcy reorganization | Carl Icahn | Comcast Corp. | Dish Network Corp. | initial public offering | IPO | James Bond 007 | Lions Gate Entertainment Corp. | Los Angeles Times | Mad Men | Metro-Goldwyn-Mayer Inc. | MGM | MGM Holdings Inc. | SEC | Securities and Exchange Commission | Skyfall | Sony Corp. | Spyglass Entertainment Holdings LLC | The Hobbit An Unexpected Journey | Tyler Perry

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