The activist shareholder and his son Brett are to sell up to 44,161,971 of their shares of Lionsgate common stock in a move that ends their long-running battle for control of the company.

The amount is virtually the Icahns’ entire ownership stake, which climbed over the course of several years to 33.2%. In addition the parties have agreed to dismiss all outstanding litigation and potential claims against each other.

According to a press release: “Under the terms of the settlement agreement, a Lionsgate company has purchased 11,040,493 shares of Lionsgate common stock from the Icahns at $7.00 per share in a transaction to be completed by September 2, 2011.

“One or more affiliates of MHR Fund Management LLC, an entity controlled by Mark H Rachesky, a director of Lionsgate, has purchased an additional 11,040,493 shares of Lionsgate common stock from the Icahns at $7.00 per share in a transaction to be completed by September 2, 2011.

“Over the next 35 business days, Lionsgate will also have the right to designate one or more parties to purchase up to 22,080,985 additional shares of Lionsgate common stock from the Icahns at $7.00 per share. The Company noted that the $7.00 purchase price was approximately 7% below Friday’s closing market price of $7.55 and was approximately the same as Icahn’s cost basis for the shares.”

“We believe that this accretive and antidilutive transaction is in the best interests of all Lionsgate shareholders, and it allows the Company to continue to focus on the execution of its longterm business plan,” Lionsgate co-chairman and CEO Jon Feltheimer said in a statement. 

“As some have noted, my own “slate” is pretty full at the time, and I therefore determined that it is a good time to exit,” Icahn said in a statement.

Perella Weinberg Partners served as outside financial advisor and Wachtell, Lipton, Rosen & Katz and Heenan Blaikie served as legal counsel to the board.

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