Lionsgate has reportedly made a new proposal to merge with MGM. And in a surprise twist, Carl Icahn, the activist investor involved in a long-running struggle with Lionsgate management, is backing the move.

Though details have not yet been revealed, the proposal would give independent powerhouse Lionsgate a 45% stake in a merged company. MGM lenders would own the other 55%.

Icahn (pictured), who owns more than 33.5% of Lionsgate and holds more than $500m in MGM debt, said in a statement that a merger “would enhance value for all constituencies and we believe this proposal as submitted is far better for MGM holders than the current proposal to combine MGM with Spyglass.”

The proposal comes a few days after MGM unveiled details of a bankruptcy plan which, if approved, would leave the long-beleaguered studio mostly owned by its lenders and headed by Spyglass Entertainment chiefs Gary Barber and Roger Birnbaum.

The plan calls for MGM’s secured lenders to exchange more than $4 billion in outstanding debt for 95.3% of the equity in the company - currently owned by a group that includes Providence Equity Partners, Comcast and Sony - when it emerges from Chapter 11 bankruptcy.

MGM’s lenders currently have until October 22 to vote on the bankruptcy plan.

MGM rejected an earlier $1.4bn offer by Lionsgate to buy the studio.

Icahn, meanwhile, is continuing with his lawsuit against Lionsgate over a debt-for-equity swap that diluted Icahn’s stake from 38%. The swap was Lionsgate’s latest move to defend itself from Icahn’s planned proxy fight to replace the company’s board.

The case is being heard this week in a Canadian court.