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Getting Icahned

27 Mar 2012 By Jeffrey Goldfarb

Carl Icahn gave Breakingviews a first-hand window into his methods. A recent column published about the 76-year-old activist investor irked him. His reaction echoed the tactics he has been using with corporate boards for decades. The experience makes it easier now to empathize with the American billionaire’s targets, but like some of those on the receiving end of his agitation, it also revealed a somewhat surprising alignment of interests.

At the outset, Icahn’s approach felt hostile, but it was by no means unsolicited. A Breakingviews columnist had telephoned Icahn to give him an opportunity to respond to a view that his future activist campaigns might be weakened because of a court examiner’s damaging findings at Dynegy, an energy group where Icahn also had meddled. Though Icahn tried to reach Breakingviews before publication, his messages were not received until later because of technical and human errors on our end.

Understandably, Icahn was irritated. When he finally got through to a Breakingviews editor, however, his arguments crossed over to the outlandish. These included a claim that the column was written by a paid operative of CVR Energy, another company he’s trying to buy and which featured in the column. Some of it sounded intimidating, akin to Icahn’s approach with Time Warner in 2005, and as he so often addresses management and boards he finds complacent or incompetent.

An inflammatory letter that followed from Icahn – another page out of his activist playbook – set the Breakingviews editorial team in motion to respond to the billionaire. His retort was discussed, edited, renegotiated with Icahn and then slotted to appear as a “Letter to the Editor” in an upcoming edition of Breakingviews.

But shortly after agreeing to the epistle’s contents, Icahn withdrew. The reversal was evocative of his fickle logic over a Lions Gate merger with MGM, back in 2010 when he was trying to buy the studio responsible for “Mad Men” and “The Hunger Games.” And then, in what seemed like the journalistic equivalent of greenmail – yet another familiar gambit for a sly, old raider – he offered an on-the-record interview in exchange.

Though the Letter to the Editor did not run, Icahn pressed ahead with embroiling Breakingviews in his fight at CVR anyway. He issued a revised version of the letter that had passed between us to investors of CVR – including some of our edits gratis and only thinly veiling the inspiration for his arguments in the first place. In a familiar “bear hug” form of activism, Icahn effectively bypassed Breakingviews management and took his case directly to shareholders.

His decision to relocate the fight ultimately backfired. The commentary “written by a major media organization,” Icahn said, was “fraught with inflammatory rhetoric,” as he tried to persuade CVR investors to tender their shares into his fiendishly complex takeover bid. The targeted company from Sugar Land, Texas, used the moment as an opportunity to draw attention to the Breakingviews column, by name, and the absurdity of Icahn’s notion that it had planted the story.

Despite all that, a deal’s a deal and Icahn was true to his word, inviting Breakingviews into his office overlooking Central Park. He spent much of the chat sounding off against lazy, entrenched management and supine boards. He reckons U.S. companies operate in a “dysfunctional corporate governance system” and that there aren’t enough people like him with the guts to challenge the status quo. On this subject, Icahn’s views converged closely with those of many Breakingviews columnists.

Of course, Icahn’s pugnacious ways persisted to the bitter end. He showed off some 50 years of tough Wall Street negotiating experience by haggling over which quotes could be published in the accompanying Q-and-A. Even so, it’s hard not to respect the passion and acknowledge the ample common ground. Icahn said he thinks that even when he doesn’t get what he wants from companies his mere presence on the scene creates additional value. For Breakingviews at least, that might be true.


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