Carl Icahn is apparently turning up the heat on his latest target, Time Warner Inc., as reports surfaced last week that the corporate raider is considering making a tender offer for as much as 10% of the media giant’s stock.
Icahn began making waves at Time Warner in early August, disclosing that Icahn Partners, along with Franklin Mutual Advisors, JANA Partners and S.A.C. Capital Advisors, had accumulated Time Warner stock and options worth about $2.2 billion on the open market, or about 2.6% of Time Warner’s total shares.
Icahn also called for Time Warner to increase shareholder value by raising its stock repurchase plan to $20 billion from its current $5 billion and by spinning off its cable operations.
Time Warner already has announced plans to spin of 15% of Time Warner Cable after it completes its merger with Adelphia Communications Corp., expected in the first quarter of next year. That hasn’t appeased Icahn.
Reports in Bloomberg News and The Wall Street Journal last week said Icahn was looking to boost his position in Time Warner to 10%, and was talking to various investors about increasing the stake. Those reports also said that Icahn was willing to put up as much as $1.5 billion of the $6 billion needed to buy the stock.
The news drove Time Warner stock as high as $18.25 on Aug. 30 (up 4.5%), before settling down to $17.89 (up 43 cents) in 4 p.m. trading. The stock ticked up 2 cents, to $17.91, on Aug. 31.
Icahn met with Time Warner chairman Richard Parsons on Aug. 17, a one-hour meeting the two later characterized as productive. Icahn said in a statement after the meeting that the two agreed Time Warner stock was undervalued. But no action resulted.
Spokeswomen for Icahn and Time Warner did not return phone calls for comment.
By making the tender offer for a bigger chunk of Time Warner stock, Icahn could increase the pressure on management to give the corporate raider at least some of what he wants. It also could provide fuel for a proxy fight for board seats at Time Warner’s next annual meeting of shareholders.
It’s not a given that Icahn will be able to wield any additional clout even with a larger stake. In the early 1990s, Seagram Ltd. attempted to win seats on Time Warner’s board of directors after accumulating a 15% stake but was thwarted by then-chairman Gerald Levin. Seagram sold most of that stake to institutional investors a few years later.