If Warren Buffett is the finance world’s lovable grandfather who everyone wants to see at Christmas, then Carl Icahn may very well be the unpopular uncle who shows up at Thanksgiving unwanted.
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Buffett is widely seen as a corporation’s friend. When he invests, it is like the Good Housekeeping Seal of approval. When Icahn starts buying a company’s stock, it is often seen as close the windows, lock the doors and hide the kids.
Icahn wasn’t the first corporate raider, but he may go down in history as the most active.
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While Icahn and his ilk prefer the term “activist investor” the reality is his moves on companies are rarely welcomed. His latest is a fierce fight against Occidental Petroleum Corp’s board over its $38 billion deal to buy Anadarko Petroleum. Icahn is against the deal calling it “hugely overpriced.”
Buffett’s Berkshire Hathaway financed the acquisition with $10 billion, but what has pitted billionaire against billionaire is that part of the deal has Buffett receiving 100,000 shares of cumulative perpetual preferred stock with a value of $100,000 per share. Icahn criticized the arrangement.
This is not the first time, the two financial titans have crossed swords. In 2014, Icahn authored a piece in Barron’s knocking Buffett for his passive investment in Coca Cola. Icahn had issues with Buffett abstention from a vote on the soda company’s compensation plan. Icahn questioned that “if a man of Buffett’s standing couldn’t take a stand, how can we expect other board members in this country to voice their opinions, especially if they are opposed to the CEO’s interest?”
In his latest letter Icahn claims Occidental has lost $21 billion in market cap on this deal – hence his proxy fight against the board and his desire to replace board members.
It is a familiar entry from the Icahn playbook. Here’s a look at how Icahn game plans have fared in the past.
Trans World Airlines – In 1985, Icahn bought the once-mighty airline reeling from deregulation and became chairman of the company. Three years later he took the company private amidst bitter fights with many of the airlines’ unions. The privatization raised the airlines’ debt to $4 billion. Routes, gates and planes were sold off , but bankruptcy was declared in 1992 and in January of 1993, Icahn stepped down as chairman leaving with millions and a discount ticket arrangement he profited from after leaving. Another bankruptcy and the tragic TWA Flight 800 crash from New York’s JFK in 1996 put the airline on tenuous ground. American Airlines bought what was left of the once might airline in 2001 which by then, Icahn was on to new targets. Marvel Comics – In 1996, Icahn held hundreds of millions of outstanding bonds for the comic book company and was ready to don a cape to save the company from rival financial kingpin Ron Perlman. He was awarded control in court albeit but only for a short term before executives from Marvel’s sister company, Toy Biz, mounted a charge to claim control of the company. One of those executives was Avi Arad who became the real superhero of Marvel as he is credited with pushing Marvel into the movie business and making the company a multi-platform success story. Marvel was sold to Disney in 2009 for $4 billion.TickerSecurityLastChangeChange %DISWALT DISNEY COMPANY137.96+5.00+3.76%Mylan Laboratories — In 2004 the drug company announced a deal to acquire King Pharmaceuticals. Icahn purchased a large block of stock and threatened a proxy fight (again) over the acquisition. Mylan eventually gave up it’s the pursuit of King.TickerSecurityLastChangeChange %MYLMYLAN NV17.61+0.60+3.53%Motorola – In 2007, Icahn took to pen and paper again writing a letter to Motorola shareholders blasting the company’s board as “passive and reactive” as he waged another proxy fight. In addition to the usual request for board seats, Icahn also wanted to spin off Motorola’s mobile handset unit as a separate company. He did wind up with two board seats and eventually, the handsets were spun off, but it started a game of hot potato with Motorola Mobility which was bought by Google in 2012 for $12.5 billion. Two years later Google sold the company to Chinese computer giant Lenovo.Lionsgate – In 2010, with the Marvel sale the talk of Hollywood, Icahn targeted the independent movie studio, Lionsgate. Lawsuits and proxy fights ensued with Icahn gobbling up 33 percent of the company. But the company led by longtime Hollywood veteran Jon Feltheimer fended him off with Icahn waving the white flag claiming he had a “full slate” and that he “determined it was a good time to exit.” TickerSecurityLastChangeChange %LGF.ALIONS GATE ENTERTAINMENT CORP.9.13+0.81+9.74%
Apple – When Icahn started buying shares of Apple in 2013, Silicon Valley and Wall Street cast a dual focus on the tech company. In August of 2013, he showed that he adapted to the times and tweeted
that Apple was “undervalued” and tweeted a short time later that he had spoked to Apple CEO Tim Cook. Apple’s market value jumped by about $17 billion on the tweets. Cook and Icahn had a dinner where they agreed to “continue dialogue.” A few months later he tweeted an “open letter” to Apple CEO Tim Cook. In the letter, Icahn declared that Apple’s stock should be at $240
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per share. It was trading for in the $130 neighborhood. After a nearly three year drama, he sold his 52 million shares in 2016 for a $2 billion profit.