LOS ANGELES - Lions Gate Entertainment Corp. said Tuesday that its shareholders rebuffed the latest challenge from billionaire investor Carl Icahn, rejecting his candidates and electing all 12 that management put forward for Lions Gate's board of directors.

But the niche film studio's shares fell as investors reacted to Icahn's announcement Monday that he was letting his tender offer for outstanding shares expire.

The 74-year-old activist investor had given up hope Monday that his five board nominees would be elected. A court ruling last week made it "virtually impossible" for him to succeed, Icahn said in a statement.

The studio behind the "Saw" horror franchise and TV shows like "Weeds" and "Madmen" said Tuesday that the preliminary results showed shareholders continue to back its strategy. A spokesman did not immediately respond to a request for further comment and for information about its margin of victory at the annual shareholders meeting in Los Angeles.

"Today's outcome reaffirms that Lionsgate shareholders continue to have confidence in the board's and management team's strategy to enhance value for all Lionsgate shareholders," it said.

The shares fell 45 cents, or 5.4 per cent, to close Tuesday at $6.64. They had dipped as low as $6.51. Icahn's bid was for $7.50 per share.

Icahn's lawsuit sought to prevent rival shareholder Mark Rachesky from voting shares he acquired in a complex debt-for-equity transaction in July that boosted his stake and diluted others, including Icahn's. After the transaction, Rachesky owns about 29 per cent, compared to about a third for Icahn.

After a court in British Columbia, where Lions Gate is based, rejected his case, Icahn took it to New York, where a trial court is to hear it, though a judge declined to bar Rachesky from voting his new shares.

Icahn dropped his offer to buy more shares because it was contingent on winning an injunction barring Rachesky from voting those shares.

Icahn said Monday that he would continue to monitor the situation at Lions Gate, which operates out of Santa Monica, Calif., but is based in Vancouver, British Columbia, and "aggressively take all actions necessary to protect our investment."

The battle has raged all year and gotten increasingly feisty. Earlier this month, Icahn released excerpts from an email written by Lions Gate's vice chairman, Michael Burns, stating that the July swap was meant to "dilute the (expletive)" out of Icahn. Publicly, Lions Gate had said the transaction was part of its plan to reduce its debt.

In October, Lions Gate sued Icahn, claiming he was playing a "double game" by buying up Lions Gate shares while criticizing its attempt to merge with struggling studio Metro-Goldwyn-Mayer Inc., then backing the plan after he bought a large portion of MGM debt at a discount.

MGM later entered a prepackaged bankruptcy without Lions Gate's participation.