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November 30, 2005

Icahn bears down on Time-Warner

Carl Icahn has provided this blog with some interesting fodder for posts over the past couple of years, and it looks as if the hedge fund investor is primed to do it again with his announcement yesterday that he intends to field a slate of directors to seek a majority on Time-Warner's 14-member board while hiring Bruce Wasserstein and Lazard Ltd. to help him win the proxy fight.

Icahn and a group of supportive investors have accumulated nearly 3% of the $85 billion media company in recent months amidst a publicity campaign that has highlighted the mistakes of current Time Warner management, including selling Warner Music Group and a big stake in the Comedy Central cable channel at what Icahn called "fire sale prices" and failing to remove the directors who approved Time Warner's disastrous merger with America Online in 2001. Ironically, Wasserstein lobbied to be named an adviser to the old Time Warner after the company hatched its ill-fated $140 billion deal with America Online Inc. in 2000.

The relationship between Icahn -- who usually acts on his own -- and Wasserstein and Lazard reflects the changing dynamics of such big deals, where hedge fund activists such as Icahn are taking increasingly aggressvie positions in public companies and investment banks are being attracted to serve the hedge fund's interests as opposed to the traditional role of advising the target company. Keep an eye on this battle as Icahn's activism will force Time Warner's management to provide a clear vision for the company's future, which is never a bad thing for investors.

Posted by Tom at November 30, 2005 06:32 AM

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