Carl Icahn talking at Turning in Alpha in New York on Sept. 13, 2016.
David A. Grogan | CNBC
Corporate: Dana Inc. (DAN)
Trade: Dana supplies power-conveyance and energy-management answers for automobiles and equipment in North The united states, Europe, South The united states, and Asia Pacific. It provides sealing answers, thermal-management applied sciences, and virtual answers to automobile and engine producers. The corporate operates in 4 segments: Gentle Car Power Methods, Industrial Car Power and Movement Methods, Off Freeway Power and Movement Methods, and Energy Applied sciences.
Inventory Marketplace Worth: $3.1B ($22.11 in step with proportion)
Activist: Carl Icahn
Share Possession: 9.91%
Moderate Value: $20.95
Activist Remark: Carl Icahn is the grandfather of shareholder activism and a real pioneer of the tactic. Whilst he isn’t slowing down in any respect, he lately reached an settlement together with his son, Brett Icahn, to rejoin the company because the eventual successor. Brett plans to make use of his father’s liked manner of pushing firms to make adjustments designed to spice up their inventory costs, even though he hasn’t dominated out pleasant bets too. This isn’t a departure from the tactic Carl has succeeded with for a few years. He can also be pleasant (i.e., Apple, Netflix) or he can also be confrontational (i.e., Woodland Labs, Biogen), frequently it is dependent upon the reaction of leadership. Brett is an excellent activist investor in his personal proper, now not as a result of he’s Carl’s son, however as a result of he has demonstrated a protracted monitor report of extraordinarily a hit activist making an investment. The Sargon Portfolio he co-headed at Icahn at one time totaled round $7 billion and integrated extraordinarily winning investments in firms reminiscent of Netflix and Apple. The Sargon Portfolio considerably outperformed the marketplace with an annualized go back of 27%. Alternatively, previous to that Brett began in 2002 with Icahn as an analyst and used to be later accountable for campaigns like Hain Celestial (280.3% go back as opposed to 46.7% for the S&P 500), Take Two Interactive (81.5% as opposed to 64.5% for the S&P500) and Mentor Graphics (106.4% as opposed to 79.4% for the S&P 500).
What is Going down?
On Jan. 7, 2022, Icahn and the corporate entered right into a Nomination and Standstill Settlement pursuant to which the corporate appointed Brett Icahn and Gary Hu (each portfolio managers at Icahn Capital) as administrators to the board and agreed to incorporate them on their slate of director nominees for election on the 2022 annual assembly. Icahn agreed to abide by means of sure standstill provisions till he now not has administrators at the board.
In the back of the Scenes:
Icahn has super revel in within the car business, recently proudly owning and running Icahn Automobile, which makes up 28% of the overall internet gross sales of Icahn Enterprises (“IEP”). Icahn Automobile used to be constructed, largely via acquisitions. Beginning as an investor in Federal-Tycoon in 2001, Icahn in the end bought all of the corporation by means of 2017. Icahn additionally bought considerably the entire U.S. auto portions property of Uni-Make a selection, Inc., a number one car portions distributor for home and imported automobiles; Pep Boys – Manny, Moe & Jack, a number one aftermarket supplier of car provider, tires, portions and equipment around the U.S. and Puerto Rico; the franchise companies of Precision Track Auto Care; and American Driveline Methods. Icahn in the end offered Federal-Tycoon to Tenneco in 2018 for $5.4 billion, and lately Icahn Automobile is composed of Pep Boys car aftermarket retail and repair chain, Auto Plus car aftermarket portions distributor, Precision Track Auto Care owned and franchised car provider facilities, and AAMCO Overall Auto Care franchised provider facilities. The companies of Icahn Automobile general over 22,000 staff, over 2,000 company-owned and franchise places and 25 distribution facilities all the way through the U.S., Canada, and Puerto Rico.
Icahn isn’t just a professional about this business, however he additionally has revel in with this corporation. In March 2006, Dana declared Bankruptcy 11 chapter ,and Icahn bought roughly $101.25 million of the corporate’s then-$2.25 billion unsecured debt with the purpose of being an “lively player” within the chapter case. Icahn once more changed into an fairness proprietor within the fourth quarter of 2020 and filed a passive 13G on Feb. 4, 2021 with a 7.5% possession. His intent since modified from passive to lively and he filed this 13D upon taking two board seats on the corporation.
There is not any doubt that Icahn’s two portfolio managers, Brett Icahn and Gary Hu, will make value-added administrators as they now not handiest have business revel in, however are shareholder administrators – both by itself is efficacious for a board member, however it is extremely uncommon to have a director with either one of the ones attributes. So, if this is all Icahn does from an activist point of view on this funding, he must be developing vital price for shareholders.
Alternatively, it’s laborious to omit the elephant within the room. Icahn constructed his car business on acquisitions, and Dana seems to slot in very effectively in IEP’s car industry. Additionally, IEP states that its technique in its Automobile section is to keep growing its business portions gross sales and its car provider industry, and it’s going to proceed to imagine strategic possible choices in its car aftermarket portions industry to maximise price. When Icahn bought Pep Boys, he additionally mentioned: “We consider that with our considerable sources and information of the business we can develop this industry and make the most of consolidation alternatives, thereby reaping benefits shoppers, production companions and staff, in addition to our shareholders.” So, it’s laborious to consider that Icahn isn’t no less than bearing in mind Dana as a possible acquisition or merger candidate. Alternatively, as an investor who has all the time prioritized company governance and shareholder price, we think that if he does achieve the corporate, it’s going to handiest be after a gross sales procedure by means of an unbiased funding financial institution and an arms-length negotiation wherein the Icahn administrators recuse themselves.
Ken Squire is the founder and president of 13D Track, an institutional analysis provider on shareholder activism, and the founder and portfolio supervisor of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments. Dana is owned within the fund.
