A group led by financier Carl Icahn is considering boosting its stake in Time Warner Inc. to 10% to pressure the media giant to buy back more shares and spin off its cable division, a person familiar with Icahn’s plans said Tuesday.
The activist hedge fund group, which includes SAC Capital Advisors, Jana Partners and Franklin Mutual Advisors, disclosed this month that it had shares and options for about 2.6% of Time Warner.
A tender offer for an additional 7% or more of Time Warner could cost about $6 billion, a sum the person said could be obtained through cash and borrowing.
Time Warner shares rose 42 cents to $17.89 on Tuesday.
Icahn, who is known for buying large stakes in public companies and agitating for change, wants to build a large enough position to have significant influence over Time Warner, said the person, who asked to remain anonymous.
Icahn met with top executives of Time Warner two weeks ago to discuss his demands, which include a $20-billion stock buyback program and a cable division spinoff, a meeting he called “productive.”
Icahn could not be reached for comment Tuesday. Time Warner declined to comment.
The company has already cut its debt load, virtually closed the book on several government probes of accounting troubles at its online division and initiated a program to buy back as much as $5 billion of its stock.
Icahn’s activist investor strategy is similar to the move made by billionaire investor Kirk Kerkorian at General Motors Corp. this year. Kerkorian offered to spend as much as $868 million to buy as many as 28 million GM shares at $31 each to boost his stake to nearly 9%.
Although Kerkorian fell short of his goal, his interest in GM helped propel the stock despite credit downgrades and other travails for the world’s biggest automaker. GM shares rose 41 cents to $34.45 on Tuesday.
This month, Six Flags Inc. stock soared on news that Washington Redskin owner Daniel Snyder had launched a tender offer of $6.50 each for the shares as part of an activist campaign. The company last week put itself on the block, and its shares closed at $7.03, up 5 cents, Tuesday.