Icahn sells MGM stake as IPO looms

Activist investor Carl Icahn has sold his 25% stake in US studio Metro-Goldwyn-Mayer (MGM), a move that comes ahead of a potential IPO and marks his exit from Hollywood.

Carl Icahn

In shedding his stake to MGM’s parent company, MGM Holdings (MGMH) for about US$590m, Icahn has effectively left the entertainment business, as he now has only an 8% stake in video games publisher Take Two Interactive.

The 76-year-old billionaire is known in TV circles for his campaigns to change the corporate structures of not only MGM but also Lionsgate Entertainment and Time Warner. He had attempted a takeover of MGM in 2010 but eventually settled for a seat of the board.

This week’s deal sees MGMH acquiring 17.6 million shares for US$33.50 each. This is US$8.50 higher than the US$25 a share that MGM stock was trading at this morning. The deal is expected to close within weeks, according to US business media

Last week, MGMH filed a note revealing it was exploring the possibility of going public through an IPO worth potentially US$3bn. This comes after it emerged from bankruptcy protection in December 2010 with a US$500m war chest for new content and new co-chairmen and CEOs in Spyglass Entertainment founders Gary Barber and Roger Birnbaum.

MGM is best known for the James Bond movie franchise, though it operates branded television channels and distributes content around the world. Last year, it brought former NBCUniversal International channels chief Roma Khanna onboard to run its television and digital business.

For Icahn, the deal marks the end of the line in entertainment, after he sold his 33% holding in mini-major Lionsgate, which produces AMC’s Mad Men, last year.

This ended open hostilities between him and the Lionsgate board, which he accused of corporate mismanagement. Icahn had planned to take control of both Lionsgate and MGM and merge them.

He also made a failed bid for bankrupt video rental firm Blockbuster, whose assets were sold to US pay-TV platform Dish Networks for about US$228m.

MGM’s major shareholders are a group of hedge funds, which took control during the debt reorganisation.