The game at MedImmune was over on Valentine's Day, we can now see, when Carl C. Icahn disclosed that he had bought stock in the Gaithersburg biotech company worth $89.8 million.
He didn't threaten a proxy fight against MedImmune until March, he later told The Washington Post, but he hardly needed to. Mere news that Icahn has taken a stake in your company delivers as message as obvious as a severed horse's head: Place all or part of your company up for sale, or prepare for war.
On Monday, MedImmune agreed to sell itself to AstraZeneca for twice its stock market value from a few months earlier. Profit for Icahn: $71 million.
Almost alone among the corporate raiders of the 1980s (Kirk Kerkorian is an exception), Icahn is still active, ornery and often profitable. From TWA to Blockbuster to Time Warner to ImClone and MedImmune, he has traced the arc of the economy, amassed a reported $10 billion and personified the rougher side of American capitalism.
Such people have changed the country as much as the rise of personal computers and the Internet, often for ill, sometimes for better. Nobody knows how a post-Icahn MedImmune will turn out, but it certainly will be a far different company than if Icahn Management LP hadn't stepped in.
Before the mid-1980s, the notion of shareholder rights was discussed more than enforced. The stock market had only begun to recover from a decadelong nap. Poorly performing CEOs were paid far less than now, but they enjoyed job security and prestige.
Swashbucklers such as Icahn, T. Boone Pickens, Sir James Goldsmith and Kerkorian, often working with billions borrowed through junk bonds, jolted executives and workers alike.
CEOs were often ejected, giving rise to the "golden parachute" policy that allowed them to feather their nests on the way down. Workers were far less lucky.
To meet staggering junk-bond interest payments, companies that had succumbed to the raiders or rushed into the arms of a "white knight" laid off hordes of employees.
The stock market soared, and the U.S. economy revived. Whatever the raiders' destructive effects, they may have helped spur the economic and tax-revenue growth that the country was missing in the 1970s. An absence of Icahns, some believe, explains the long, depressing slump that began in Japan in the early 1990s.
Today, the financing and companies are different. Icahn's full head of hair is turning white, but the idea is the same: Buy big stakes in underperforming businesses and try to extract latent value through browbeating, proxy fights or takeover threats.
In January, Icahn disclosed ownership in electronics giant Motorola, and said he would ask for a board seat. The same month, he disclosed an increased stake in Telik, another biotechnology company he believed was undervalued, of almost 10 percent. Two months ago, he agreed to buy auto parts maker Lear Corp. for $2.3 billion.
Icahn acquired his piece of MedImmune late last year, at an average price of $32.37 per share, Securities and Exchange Commission filings show. The stock had traded north of $80 in 2000 but fell back after sales of MedImmune's nasal-spray flu vaccine proved disappointing.
Icahn wasn't the only one who thought MedImmune management should do more to boost the shares, presumably by selling the company to a huge outfit such as AstraZeneca. Big pharma is running out of new products even as its patents on successful medicines tick down. It would be more inclined than public investors, the thinking went, to bet big on MedImmune's unproven development drugs.
David Katz of Matrix Asset Advisers formally asked MedImmune to consider selling itself in December.
Pressing a message
Katz never talked to Icahn, but "Icahn identified a lot of the things that we identified," he said in an interview yesterday. "It's our very strong sense that there were a number of significant, very large shareholders that were weighing in privately," pressing MedImmune with the same message, he said.
But it was disclosure of the Icahn stake that seemed to make the difference.
"Icahn basically told them to fish or cut bait," Katz said. "It became obvious to everybody that, at a minimum, here was somebody with a gun that could be used on MedImmune's board of directors."
Icahn, 71, did not return my phone calls. But his entrance gave MedImmune's board and executives a clear choice: Sell the company and get rich on stock options or face a painful, lengthy proxy fight that you would probably lose.
On the block
Two months later, MedImmune put itself on the block.
Welcome to Carl's World, MedImmune: Those 2,500 jobs aren't as safe as they were six months ago, although management says they are, and your new owner will be laden with billions in buyout debt.
Twenty-some years after his rise to prominence, Icahn has not stopped wreaking creative destruction. The man who supposedly said, "If you want a friend on Wall Street, get a dog" still isn't making many friends himself.