If you ask me, I suppose this decision could surprise even Icahn himself few month ago. We should take into consideration:
- The recent downgrade of the stock in September, and recently
- The regression of stock price in September (19-17), and recently (18-17)
- Could and did Icahn actively influence the board at Take Two to his advantage?
- How much in Take Two is in his portfolio? Did he make profit afterward?
There are more, but we could easily find some clues from past events, and don't forget the logic :)
I think it is because it took time to negotiate the deal. This had to be coming for a while, as these deals don't just happen over night. CI gets to sell all at once, so gets a higher price than when people realized he is selling 12% of the company. (float becomes huge) We had the pain all at once yesterday on the TTWO side, and we probably retain more $$ in the coffers than if CI stayed on and demanded special dividend, and we reduce the share count.
I actually think it is a win win other than the expertise of the CI team not being on the board... that said, there goals may not have been aligned with anything other than the short term milking...
icahn is more like bejamin graham, graham had a 50% rule...Graham would find value stocks, although some were never revalued upwards which dampened his performance. If a stock didnt move after two years then he would automatically get out. He taught Warren Buffet at Colombia University. Then Warren went work for Graham on wallstreet. So graham bought into all these businesses and in the end, some never went up, some went bankrupt, and alot he sold at 50% gain. How Warren Buffet became the richest man in the world...well he went home to nebraska, and looked at the performance of the businesses graham sold at 50% profit, yet kept soaring years after!(Graham missed the real gains), then studied the fundamental similarities in the financial statements income statement, balance sheet, and cash flow) and discovered a way to tell if they had a durable longterm competitive advantage by looking at similarities in their financial statements.
such as operating margin over 40%, sga expenses between 30-80%, with little to no r&d expenses,atleast where both expenses equaling less than 80%. Deprec. Amortiz. of less than 10%. Interest expense of less than 15%, consistent earnings uptrend, etc etc. He looked at these factors over a 10 yr period...buffetology...and icahn doesnt invest like warren, hes more like graham, he will invest in any company, good or bad, as long as he can get it for a cheap enough price...so it explains him getting out before the ttwo train gets to the 20+ pps station...Icahn leaving is not the end of this by any means...but it would have been a better sign if the icahns stayed on board...
“It’s sort of insane that you wouldn’t talk to all of your shareholders,” Strauss Zelnick, Take-Two’s chairman and chief executive officer, said today on Bloomberg Television. “Generally people who control big pools of capital, it didn’t drop into their laps. Carl shares ideas.”
Icahn has had hits and misses in entertainment. In October, he sold some of his holdings in Netflix Inc. for a profit of about $800 million in about year. He never acquired board seats.
Two years ago, Icahn sold 19.2 million shares of Lions Gate Entertainment Corp., the independent film and TV studio, for $7 each after trying unsuccessfully to buy the company. The shares have more than quadrupled since, closing yesterday at $30.23, on the strength of films including “The Hunger Games” and the “Twilight” series.
Icahn led a 2005 proxy fight that put him on the board of the video rental chain Blockbuster as the largest shareholder, when the stock was worth about $10. He resigned five years later and in March 2010 sold most of his stock."
Blockbuster went into bankruptcy in September 2010 and was sold to Dish Network Corp., which has closed its stores.
Considering how hard nosed he was with Dell, I highly doubt that was the reason. Plus, he had all those board members. Maybe he needs the cash for NUAN or AAPL or RIG. Or maybe he felt he did all he could with the company. No need for activism if the current management can handle the business. Who knows.
“This share repurchase reflects our confidence in the Company’s outlook for record results in fiscal 2014 and continued Non-GAAP profitability every year for the foreseeable future,” said Strauss Zelnick, Chairman and CEO of Take-Two. “With our ample cash and strong expected cash flow, we are able to pursue a variety of investment opportunities, including repurchasing our Company’s stock.
“On behalf of our board and management team, I would like to thank Brett, James and Sung for their support, dedication and service to our organization. They leave Take-Two better positioned than ever for continued success.”
The repurchase announced today was made outside of the Company’s existing share repurchase program, pursuant to which 7.5 million shares are authorized to be repurchased. The Company has repurchased 4.2 million shares in the open market at an average price of $17.38 per share pursuant to this authorization to date."