Icahn Apparently Drops Bid to Boost GM Stock
Financier Carl Icahn has reportedly abandoned his campaign to boost the value of General Motors Corp.
Icahn sold his stake in the world’s largest auto maker a month after buying it, the New York Times reported Friday. GM shares fell as much as $1.94 or 2.8% during the day before closing down 6 cents at $68.25 on the New York Stock Exchange.
The billionaire corporate raider, known for pressing companies to boost their shares, indicated in a statement that he is unhappy GM had disclosed his interest in the company. That disclosure boosted the stock price when Icahn was still building his position, the newspaper reported.
Analysts suggested that Icahn might push GM management to boost value for shareholders with a full spinoff of its Hughes Electronics Corp. unit, which owns the coveted DirecTV satellite television operation.
GM Chairman John F. Smith Jr. has said the company is looking at various ways to increase shareholder returns.
“We started down that road before Carl Icahn came along,” Smith said in a Sept. 11 speech.
Indeed, Hughes has reportedly been meeting with prospective buyers for DirecTV. The list of interested suitors is said to include Sony Corp., Walt Disney Co., Viacom Inc. and Vivendi.
Merrill Lynch & Co. analyst John Casesa said he doubted from the start whether even Icahn “would have the leverage to effect fundamental change at GM.”
Icahn initially reported the stake to the government through a Hart-Scott-Rodino Act filing.
“That filing is not public nor is there any requirement that the company involved make it public,” Icahn said Friday. “Certain companies have publicized my Hart-Scott filings in the hope that this might induce investors into running the price up, which might cause me to sell my shares, make a profit and become uninvolved in their company.”
Detroit-based GM said Aug. 18 that Icahn intended to buy more than $15 million worth of its stock but less than a 15% stake. That news helped push GM as high as $76.63 on Sept. 7.
GM felt obligated to reveal Icahn’s plans because the company was in the middle of a stock-buyback program, spokeswoman Toni Simonetti said.
Icahn declined to confirm whether he has sold his shares, and GM said it didn’t know Icahn’s current position.
Icahn did say he tells companies it is “misleading” or even “manipulative” for them to disclose his stakes, “since I’m not required to purchase more stock, and, in fact, I can sell my position if my intention to purchase changes for any reason.”
He added: “While I am flattered that investors would buy on the news that I have made a Hart-Scott filing, I believe that they are taking risks which are not being explained to them by the companies making the disclosure.”
