Carl Icahn – a raider and a philanthropist
In the United States they know that if the “corporate raider” Carl Icahn decided to sell the shares of a company, it means that all its value was squeezed out of the firm.
With half a century of work, Icahn has earned $24 billion and earned respect and fear in a professional environment. In 2016, U.S. President Donald Trump offered the financier the position of independent consultant on regulatory policy reform. At the same time, Icahn kept his business.
By engaging in unethical actions against weak companies, Carl Icahn is donating to charity. In particular, in 2016, he donated $1 million for the needs of American army veterans.
But the entrepreneur didn’t reach such heights right away. Carl was born on February 16, 1936 in a poor Jewish family on the outskirts of Brooklyn (New York). The boy’s father believed that the main thing is ” to keep a low profile,” so he sent his son to an ordinary public school. At the same time an elite educational institution Woodmore took Carl Icahn and was ready to pay for the young talent.
Study at Princeton University and a Bachelor of Philosophy is behind the financier. In the 80s, the businessman made a fortune on so-called trash bonds and became king of corporate raiding and greenmail (blackmail). This type of activity is aimed at undervalued companies and involves selling a block of shares to the issuer at an inflated price. But the greenmailer is not really interested in taking over a company whose asset price exceeds its market capitalization. In most cases, Carl Icahn was only interested in making a profit.
Carl Icahn and a tough approach to companies
As is known, there are two main ways to make profit from shares. The first of them is buying and fast selling. The second is acquisition and storage. In any case, the shareholder receives a stake in the firm and becomes its co-owner. Which, in turn, takes part in shareholder meetings and influences key decisions. But most shareholders are only interested in the income from securities. It’s not important for them to make decisions.
In his experience, the businessman proved that it is real to achieve considerable profit by acquiring a stake in companies with heavily undervalued shares. Further, having received a share in the firm, the raider comes depending on the action plan adopted. For example, the greenmailer bluffs, offering to sell the company to a third party. Or close it down altogether. Also popular tactics are proxy wars, when the management of the organization is divided into two camps and “fighting” with each other. Next comes the “peacemaker” and offers to solve everything through the sale. The management of a weakened company is offered to buy it back or sell it back – at an inflated price.
That’s what Icahn did with Tappan, the manufacturer of kitchen utensils. It turned out that the value of the organization was half as much as its assets. Carl started actively buying shares, started the war with using others and helped to sell the company to the Swedish holding Electrolux at the real price, i.e. twice as expensive as at the start. Thus, the corporate raider became twice as rich.
Lust for personal gain forced Icahn to bankrupt TWA, once the largest airline in the United States.
If Icahn actively buys the securities of a company, he often immediately receives an offer to buy back the stake (with the benefit of the unsuccessful shareholder, of course). No one needs any unnecessary problems.
In general, despite the controversial working methods, Carl Icahn and his colleagues keep the market under control: nothing personal, just business.