The move would make Icahn the largest shareholder in the company.
He is likely to negotiate a waiver with the company's lenders to avoid accelerating payments on the group's debt. Whenever any shareholder builds a stake above 20 per cent, the company's credit control mechanism automatically triggers a default prompting lenders to accelerate maturity of the debt.
Icahn, who presently has an 18 per cent stake in Lion's Gate, has reportedly tried several times to increase his influence on the company. He even tried to nominate his own representatives on the board, which did not materialise.
However, Lions Gate might consider his present offer because it is struggling to cope with trends in home entertainment sales and sharply declining DVD sales.
Lions Gate is the producer of Mad Men television series and the film Precious.