File this one under strange bedfellow lawsuits.
Having flirted with Carl Icahn to take over MGM, Lionsgate is calling its biggest shareholder in from the cold.
The Vancouver-based mini-studio on Thursday brought a lawsuit against Icahn for playing a “double game” as Lionsgate looks to merge with a struggling MGM.
The lawsuit, brought in the New York District Court, accuses Icahn of blocking an earlier March 2009 merger bid between Lionsgate and MGM, and then backing a second merger attempt after buying up a big slice of studio debt.
“Icahn opposed a merger with MGM not because it was bad for Lionsgate shareholders, but because it was good – so good, in fact, that he wanted to postpone it until he could buy as much of both companies as he could and thus extract for himself as much of the value stemming from the merger as possible,” Lionsgate states in its legal action.
The Lionsgate complaint insists Icahn was buying up the studio’s privately-traded debt while publicly declaring a Lionsgate-MGM tie-up as “foolish” and calling the debt-laden studio “a dinosaur with a decaying library.”
Icahn’s tune changed, however, when his position in both MGM debt and Lionsgate stock had grown to the point he stood to profit handsomely from a takeover of the Hollywood studio by the Canadian mini-studio, the lawsuit alleges.
“Now, having acquired substantial holdings in both MGM debt and Lionsgate shares, Icahn is aggressively promoting a merger between Lionsgate and MGM,” the complaint states.
The lawsuit comes as Icahn continues to make offers to purchase MGM debt from studio creditors, and has an outstanding offer for Lionsgate shares set to expire on October 30, while all the while he works behind the scenes to block a rival bid for control of the Hollywood studio from Spyglass Entertainment, the lawsuit argues.
Lionsgate offered no comment on its legal action against Icahn beyond the lawsuit itself.
But the latest fall-out between Lionsgate and Icahn calls into question their chances of successfully taking a run at the hobbled Hollywood studio.
Lionsgate is seeking damages and a public correction of “material misstatements and omissions” by the Icahn Group from the court with its lawsuit.