Carl C. Icahn began amassing shares in Apple last summer.
Updated, 8:52 p.m. |
After six months of urging
Apple to pay out more money to
shareholders, the billionaire
Carl C. Icahn dropped his effort on
His decision came after strong opposition from other big investors and an
influential shareholder advisory firm. Still, Mr. Icahn may have prevailed
in the end anyway, as Apple continued to emphasize returning money to
public letter posted to his website,
the septuagenarian activist said that he was backing down from his proposal.
But he also sought to claim victory of a sort, pointing to aggressive stock
repurchases by Apple in recent weeks.
“We see no reason to persist with our nonbinding proposal, especially when
the company is already so close to fulfilling our requested repurchase
target,” Mr. Icahn wrote.
Shares in Apple rose 1.8 percent on Monday, to $528.99.
The battle over Mr. Icahn’s nonbinding plan, which called upon Apple to buy
back $50 billion worth of shares by Sept. 27, was the latest over the
company and its $159 billion chest of cash. A number of investors, including
David Einhorn, a fellow hedge fund manager, have demanded that the
technology giant buy back shares and pay out special dividends.
But Mr. Icahn, who helped define the art of activist investing in the 1980s,
has become Apple’s most persistent gadfly, arguing that the company was
depriving shareholders by holding onto so much cash. Using an array of media
— including regular television appearances, his website and
an active Twitter feed — he has
alternately admonished and encouraged Apple’s management to change its
“The board’s latitude should not be constricted by a shareholder resolution
that would micromanage the company’s capital allocation process,” I.S.S.
wrote in its note.
That point has been
echoed by other prominent investors,
including New York City’s comptroller,
Scott M. Stringer, and
Calpers, the giant California public
pension fund. In an interview on Sunday, the comptroller contended that the
Icahn plan would deprive Apple of important financial ballast in an industry
known for its volatility.
Both Mr. Stringer and I.S.S. noted that much of Apple’s cash is held
overseas and that the company would either need to pay a big tax bill to
bring it back or borrow a significant amount of debt to finance a larger
But Mr. Icahn pointed out that I.S.S.’s report also criticized the iPad
manufacturer for being “sluggish” in returning excess cash to shareholders
and that the company’s plan amounted to bailing out a big ship with “a leaky
And he noted that Apple had become aggressive in buying back stock,
spending $14 billion on repurchases in
recent weeks. The company’s chief executive,
Timothy Cook, has said that he would
provide updates on the shareholder payout plan in March or April.
Mr. Icahn said that he remained optimistic about Apple, including Mr. Cook’s
plans to unveil new products later this year and an “opportunistic” and
“aggressive” approach to stock buybacks.
A spokesman for Apple declined to comment. But Mr. Stringer was more willing
to celebrate publicly. In
a post to Twitter on Monday morning, he
wrote, “Shareowners force Icahn to say, ‘Icant.’ ”
A version of this article appears in print on 02/11/2014, on page B4 of the
NewYork edition with the headline: Icahn Ends Call for Apple Stock Buyback.
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