(Bloomberg) — Carl Icahn’s holding firm licensed a buyback equaling virtually 27% of its shares buying and selling on the open market, doubtlessly boosting the inventory worth because the financier feuds with a brief vendor.
Most Learn from Bloomberg
Icahn Enterprises LP’s board of administrators accepted a $500 million buyback on Could 9, in keeping with a regulatory submitting. It marks the primary time the corporate, which invests in a variety of companies, has adopted a proper share repurchase program since 1987, public paperwork present.
The submitting additionally revealed that Icahn elevated the variety of shares pledged to safe his private debt. Greater than half of the agency’s shares at the moment are pledged to safe his margin loans. The corporate didn’t reply to messages in search of remark.
Icahn Enterprises’ shares have misplaced greater than a 3rd of their worth since quick vendor Nate Anderson’s Hindenburg Analysis launched a report final week claiming the corporate was overpriced, contending it discovered proof of inflated asset evaluations. Icahn, 87, has a document of waging company battles, together with a brief squeeze he orchestrated a decade in the past in opposition to billionaire investor Invoice Ackman’s $1 billion wager in opposition to Herbalife Ltd.
Based mostly on Wednesday’s closing worth, the buyback would allow Icahn Enterprises to repurchase about 15.5 million shares, or virtually 27% of the publicly traded float. Relying on the way it’s carried out, a buyback of that magnitude may jump-start Icahn Enterprises’ inventory worth, doubtlessly squeezing quick sellers resembling Hindenburg.
Icahn Enterprises didn’t purchase again any shares between 2001 and 2020, in keeping with firm paperwork. In 2021 and 2022, its solely repurchases have been technical in nature — a small variety of shares have been withheld to pay taxes on govt inventory awards.
The brand new repurchase authorization is for an indefinite interval, in keeping with the submitting, and doesn’t expire till it’s terminated by the board. The corporate should purchase again the inventory for money within the open market by means of tender gives or in privately negotiated transactions.
Icahn Enterprises’ board additionally accepted a buyback for as a lot as $500 million of the corporate’s fixed-rate senior unsecured notes. On Thursday, Hindenburg stated it had initiated a brief place in Icahn Enterprises’ bonds — with out specifying which debt securities — and reiterated its quick place on the holding firm’s shares.
Threat Issue
Whereas the corporate has roughly 369 million shares excellent, Icahn controls greater than 84% of the inventory by means of associates. That leaves about 58 million shares, value about $1.86 billion, to commerce on the open market.
Icahn has pledged greater than 3 times the publicly traded float to safe his margin loans, in keeping with the submitting, which revealed the elevated variety of pledged items below a brand new firm danger issue. Greater than half of Icahn Enterprises’ whole excellent shares are pledged to safe Icahn’s private debt.
As of Monday, Icahn had pledged 206 million shares presently value about $6.2 billion, up from about 168 million shares in February.
Icahn owns his shares by means of intermediaries whose lenders embrace Morgan Stanley and Deutsche Financial institution AG, in keeping with filings. It’s not clear if these loans are the identical because the margin loans referred to in Icahn Enterprises’ filings.
After Icahn Enterprises tumbled final week, Ackman tweeted that there was a “karmic high quality” to Hindenburg’s quick place at his rival’s firm. Ackman in the end exited his $1 billion quick place on Herbalife after Icahn squeezed him by shopping for thousands and thousands of shares within the vitamin firm.
(Provides previous repurchases in sixth paragraph and bond buyback in seventh paragraph)
Most Learn from Bloomberg Businessweek
©2023 Bloomberg L.P.