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Investor Carl Icahn Brings Changes To Take-Two Board
by Kris Graft
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January 21, 2010
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The board of directors at Grand Theft Auto publisher Take-Two has agreed to nominate for election three new board members at the request of billionaire and activist investor Carl Icahn, who holds an 11.3 percent stake in the company.
The three new nominees would replace current board members Grover C. Brown, John F. Levy, and CEO Ben Feder, none of whom will go up for re-election at the company's annual stockholder meeting this year. Feder will remain CEO of the company.
Among Icahn's three nominees are Icahn Group's SungHwan Cho, James L. Nelson, and Carl Icahn's son Brett Icahn, who's also on the board of directors at American Railcar Industries and an investment analyst at Icahn Management.
Icahn agreed to vote for all of Take-Two's board nominees, which include incumbent directors Michael Dornemann, Robert Bowman, J Moses, Michael Sheresky, and Take-Two chairman Strauss Zelnick.
Icahn also agreed that if the nominees are elected to Take-Two's board, and Icahn's holdings in the company subsequently fall below five percent, his nominees will resign from the board immediately.
Zelnick, who led a management coup at Take-Two in 2007, said in a statement, "It's important to note that Mr. Icahn did not request that these directors in particular step down; they were willing to continue in their role but agreed not to stand for re-election in keeping with their commitment to the company and desire to put the best interests of stockholders first, as they have done throughout their tenure on the Board."
Icahn added, "I'm a firm believer in the long-term potential of the Company, and from a corporate governance point of view I applaud the current board for its responsiveness." He has not commented in public on what specific changes he would like Take-Two to make.
In December, Icahn boosted his stake in Take-Two to 11.3 percent, putting his ownership at over 9 million shares valued at more than $70 million. "We believe that Mr. Icahn intends to force the company to consider a sale," said Wedbush analyst Michael Pachter at the time. Both Icahn and Zelnick are directors on Blockbuster's board.
Icahn frequently takes significant stakes in struggling companies, and then presses management to make changes that would improve its share price. He's often vocal about how he thinks his investments should be managed -- his clash with Yahoo's board was widely-publicized, and he also has a similarly tense relationship with Lionsgate Entertainment.
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Somehow.... Somehow I can see it happening but it really makes me feel like the ground he walks on, insignificant.
I wonder what his track record for driving up profits short term but ultimately running the company into the ground?
If so, I wonder if Indie games are our only salvation at this point as they are the less corrupted studios?
-On May 13, 2008 Carl Icahn purchased as many as 50 million shares of Yahoo, leaning toward launching a proxy contest.
-On May 15, 2008 Icahn confirmed that he would be commencing a proxy fight to remove Yahoo's Board of Directors in response to their "irrational" actions in rejecting Microsoft's takeover bid.
-October 2009 Ichan leaves Yahoo only after replacing Yang with Carol Bartz and closing the Microsoft deal.
This guy is a monster and doesn't care about the industry at all. He is paid to come in and establish remote control of companies through direct manipulation of their stock and directors. He's played a lot of companies that are all now subsidiaries of his own personal investments.
Here's another sweet diddy...
-On September 14, 2007, Icahn disclosed his ownership of 8.5% of outstanding shares in business software company BEA Systems Inc.
-BEA Systems shares rose more than 4% after Icahn disclosed his stake in a filing with the Securities and Exchange Commission.
-Icahn suggested that BEA Systems should put itself up for sale.
-By September 21, Icahn increased his stake to 9.88% of BEA, and on October 3, to 11.05%, and then to 13.22% on October 4, 2007.
-On January 16, 2008, Oracle Corporation announced it was purchasing BEA Systems.[12]
Its all quite sad, and it will only get worse...
This is why companies like Epic Games are privately held.
It's similar to what is happening in the finance sector, short term gain for short term profit then get out as quick as possible.
I'm not a fan of the take-over and sell investment strategy, regardless of the possibly high percentage returns, but I'll wait until I see what changes T2 makes before I denounce Icahn's actions in this situation.
You have a good point, Terry, but in this case I don't see evidence of a trumped up scandal to destabilize T2.