Friday, February 23, 2007

Icahn: Buyout Firms Are the Real Raiders

Carl C. Icahn is not afraid to shake things up at big, publicly traded companies. In the 1980’s, the billionaire financier was known as a “corporate raider”; these days “activist investor” is the preferred term. But in an interview in BusinessWeek, Mr. Icahn suggests that private equity firms are the new corporate raiders — and it does not seem intended as a compliment. Mr. Icahn takes issue with private equity firms’ habit of buying cash-rich companies from public shareholders, piling on debt and selling them later at a profit. “Cash is a great asset,” he told BusinessWeek. “But if private equity investors get their hands on it, they’ll reap the benefit instead of the shareholder.”
BusinessWeek seems dubious about casting Mr. Icahn in the role of “white knight for the common man.” But it does point out that Mr. Icahn appears to have at least four proxy battles on tap for this spring, including one with cellphone giant Motorola. Patrick McGurn, executive vice president of proxy advisory firm Institutional Shareholder Services, said he is not sure if that is one for the record books, but observes that Mr. Icahn is “certainly at the front of the shareholder activist buffet line.”
By the way, Mr. Icahn has said that he doesn’t much care whether you call him an activist investor or a corporate raider. “What’s the difference?” he said at a panel discussion in October. “I’m doing the same thing I did in the 1980’s.”
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