Icahn
NEW YORK -- Carl Icahn whipped up Time Warner stock Tuesday as the corporate raider and his allies were said to be mulling a tender offer for 10% of TW shares, worth about $8 billion.
TW rose 2.4% to $17.89 -- an impressive performance in a dour market preoccupied with Hurricane Katrina and surging oil prices.
The jump follows weeks of speculation as to how, and how hard, Icahn would push the giant media conglom to take several major steps, including spinning off 100% of its cable unit and buying back $20 billion worth of stock. Icahn believes that could push the generally sluggish shares as high as $27.
A tete-a-tete between Icahn and TW chairman-CEO Richard Parsons several weeks ago was described as congenial and constructive. The men agreed to further discussions but no date was set for a follow-up meeting.
While investors are frustrated with the stock, many support Parsons and believe he's taken solid steps to position the company financially and strategically. Few can envision TW shares rising higher than $21-$22 in the near future under almost any scenario.
It's far from clear whether Icahn will in fact launch a tender offer.
Some Wall Streeters have been surprised to see Icahn locking horns with a behemoth like Time Warner, with a market capitalization of $84 billion and about 4.7 billion shares outstanding. The cost and effort involved in amassing a stake of any influence would be monumental.
"This is not a typical Icahn deal," said longtime industry analyst Hal Vogel. "First, the float is so huge; a relatively tight float is his usual deal. And second, (the target) is usually a sleepy management that's not doing the right things, or is grossly mismanaging the business."
Icahn was unavailable Tuesday. Time Warner declined comment.
Icahn has partnered with several hedge funds and is likely hoping others will join him.
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