An investment group led by financier Carl Icahn, who is bent on encouraging management reform at Time Warner Inc., may make a tender offer to buy as much as 10 percent of the media conglomerate, according to Bloomberg. At the company’s current market price, that kind of encouragement would cost $8 billion.
Icahn’s public pronouncements have already affected not only Time Warner’s share price, but also the price of an out-of print, unauthorized biography of “King Icahn,” notes staff writer Helen Shaw.)
Icahn has held discussions with investors during the past couple of weeks about expanding his activist group to exert more influence on Time Warner and help finance the offer beyond the $2.2 billion already committed, reported The Wall Street Journal.
Two weeks ago, Icahn announced that he and his fellow investors — Jana Partners, SAC Capital Advisors, and Franklin Mutual Advisers — had accumulated stock and options of Time Warner amounting to 2.6 percent of the company’s outstanding shares if the options were exercised. He has reportedly held discussions with Time Warner chairman Richard Parsons and called for the media company to increase the size of a planned stock buyback to $20 billion, from the currently planned $5 billion. Icahn has also reportedly called for a spin-off of the company’s cable-TV unit to improve Time Warner’s share price; the company has said it will continue with its already-developed plan to spin off part of the cable unit.
Icahn’s group has reportedly talked to other large hedge funds about joining the consortium, according to sources of The New York Times. If the investor group can achieve a 10 percent stake, that would make it Time Warner’s largest shareholder and greatly improve its chances of influencing management, added the newspaper. Icahn would likely follow a tender offer with a proxy contest to win seats on the board of directors at next year’s annual meeting.