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March 18, 2009 1:22 PM

Osler, Wachtell on Opposite Sides on Icahn Clash

Posted by Zach Lowe

Carl Icahn's in-house legal team has turned to Osler, Hoskin & Harcourt for help in Icahn's attempt to gain greater influence on the board of the Canadian studio Lions Gate Entertainment, according to lawyers on the deal. Lions Gate in turn has hired Wachtell, Lipton, Rosen & Katz to defend itself from Icahn--and this isn't the first time Wachtell has been on the opposite side of the activist investor.

According to Reuters, which broke the news today about Lions Gate's decision to hire Wachtell, Icahn has been seeking a greater share of Lions Gate for several months. Icahn already owns a 14.5 percent stake in Lions Gate, but he's offering to buy about $325 million in convertible notes to up his stake to nearly 30 percent, Reuters says. Once any investor tops the 20 percent mark, certain change in control conditions are triggered, according to Reuters. 

Icahn apparently believes Lions Gate's expenses are too high and that its acquisition of the TV Guide channel was "reckless," according to Reuters. 

Keith Schaitkin, a deputy general counsel for Icahn, says Icahn wanted a seat on the Lions Gate board but that the company demanded he sign a so-called standstill agreement promising not to mount a proxy fight or make any further tender offers. The problem, Schaitkin says, was that Lions Gate would not agree to hold other large shareholders to the standstill agreement should it grant any of them board seats.

Icahn has used Osler before for advice on Canadian transactions, including his push to get Fairmont Hotels to sell itself to a larger investor (the Saudi prince Alwaleed Bin Talal, a Hogan & Hartson client) for $3.2 billion in 2006. (Icahn held a nearly 10 percent stake in Fairmont and made more than $100 million in the deal; he had previously offered to buy enough stock to give him majority control of Fairmont, according to this International Herald Tribune story).

Osler partner Donald Ross is leading the firm's team on the deal. He did not immediately return a call seeking comment.

Wachtell most recently defended Motorola in a proxy fight with Icahn.

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