Texaco nemesis Carl C. Icahn folded his hand Monday and began counting his winnings.
The corporate raider conceded defeat in his six-month battle to take over and restructure Texaco Inc. after Kohlberg Kravis Roberts & Co., which owns 4.9 percent of the oil giant, announced it had voted for management`s board of directors slate at last Friday`s annual meeting.
”I am, of course, sorry that I did not win, but so be it,” Icahn said in a prepared statement.
The official tally of the shareholder vote will not be announced for several weeks.
Icahn, who owns 14.8 percent of Texaco`s stock, had nominated himself and four other dissidents to Texaco`s 14-member board in a last-ditch effort to get the company to accept his $60-a-share takeover offer made May 25. Icahn had promised to extend the takeover offer for 60 days if he won the proxy battle.
Now that he`s lost, Icahn can console himself with the prospect of a half-billion-dollar payday when he sells his Texaco stock. He purchased his 36 million shares for $1.2 billion between November and January. On Monday, Texaco fell $1.12 to $46.87 a share, which left the value of Icahn`s stake at just under $1.7 billion.
”We have to think things through,” said a spokesman. ”Carl has said in the past he didn`t have faith in existing management, so he probably isn`t a long-term player.”
However, Wall Street will have something to say about how much Icahn makes, since he has to wait several weeks before cashing in. Securities laws say that anyone who owns more than 5 percent of a company`s stock is considered an insider and must wait at least six months after purchasing stock before selling. Otherwise, the profits revert to the company.
The distinct possibility that one-seventh of Texaco`s outstanding shares will be dumped on the market within the month is likely to depress prices as some investors head for the exits before the deluge.
Meanwhile, Kohlberg Kravis gave a ringing endorsement to Texaco Chairman James Kinnear in announcing on Monday how it voted last week.
A spokesman for the firm said it was impressed by the restructuring steps that Texaco has taken since emerging from Chapter 11 and supports management`s stated objective of increasing shareholder value by executing a significant restructuring program in the months ahead.
A Texaco spokesman said the company was grateful for Kohlberg Kravis`
vote of confidence.
Texaco has announced it will sell about one-seventh of the oil firm`s $34 billion in assets and distribute the proceeds to stockholders. The company will sell some of its 78 percent stake in Texaco Canada Inc.
Icahn, on the other hand, had planned to sell Texaco`s entire stake in the Canadian company along with half of the Caltex Group of companies. Analysts suggested Icahn`s strategy amounted to selling the crown jewels of the nation`s No. 3 energy company to finance his estimated $12.4 billion hostile offer.
Since Icahn announced his offer, Wall Street has remained skeptical that he could finance the bid. The company`s stock never rose above $52 and declined as the annual meeting approached.
To defeat Icahn, the White Plains, N.Y.-based firm assembled a coalition made up of pension funds and small investors. In a flurry of newspaper ads, the company accused Icahn of being a ”greenmailer,” which refers to takeover bids launched to force a company to buy back stock at a premium over its market price.
Icahn rejected that charge and countered with his own coalition, made up of arbitragers and institutional investors. While it`s true that Icahn has wrestled greenmail payments from a number of firms, several of his takeover efforts, including Trans World Airlines Inc. and USX Corp., have resulted in his either taking over the company or playing a key role in advising the firm.
