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Lionsgate Has Last Laugh on Billionaire Carl Icahn

Stock price has quadrupled since billionaire sold stake

Less than two years ago, Lionsgate reached a settlement with Carl Icahn that called for the billionaire investor to cash out his 33% stake for $309 million, essentially breaking even on a three-year investment.

That stake is now worth more than four times as much — $1.27 billion, based on Friday’s closing price of $28.80.

The stock price has been driven up by the $412 million buyout of Summit Entertainment, strong performance of its “Twilight” and “Hunger Games” franchises and Wall Street optimism that the studio can replicate that success.

The famously combative Icahn made his peace with Lionsgate in August 2011, with Icahn wishing the company well on its future slate. He had blasted Lionsgate management repeatedly for overspending and failing to boost the stock price to anywhere near its 2007 high of $12; relations between Lionsgate and the billionaire soured in 2009 when he was unable to persuade management to install his son Brett Icahn on the board.

For its part, Lionsgate management repeatedly accused Icahn of being an incompetent meddler, citing his mixed record in showbiz investments. The Lionsgate-Icahn battle began to die down in December 2010 when shareholders backed Lionsgate’s slate of a dozen board nominees while spurning Icahn’s quintet of dissident candidates.

The August 2011 settlement included a provision for board member Mark Rachesky to boost his stake from 29% to 35% by buying a quarter of Icahn’s stake — 11 million shares — for $7 each. That $77 million purchase is now worth $316 million for Rachesky, who’s now co-chairman.

Icahn, who is currently engaged in a battle for control of Dell Computer, did not respond to a request for comment.

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