Op-Ed

Op-Ed
What Does Billionaire Icahn's Buy-In Mean for Take-Two?

Joe Blancato | 16 Aug 2006 12:53
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The boys at Gamesindustry.biz picked up on word that mega-billionaire Carl Icahn bought 1.1 percent, or 800,000 shares, of Take-Two's stock. (You can read our News Room report on it here.) This is a big deal. Why? Pull up a chair; the Joester is here to educate.

For those who don't know Icahn's history, Icahn's known for muscling in on huge corporations, shuffling things around so they're more profitable and then reaping huge profits from doing so. His exploits began with a hostile takeover of TWA airlines in 1985, using money he made from junk bonds in the '80s. Since then, he's bought into mega-corporations Fairmont Hotels & Resorts, Blockbuster and AOL TimeWarner.

Known among the corporate world as a "raider" for his tactics, Icahn places more emphasis on performance and results-based promotions than what's the norm in most large corporations: cronyism and lifetime appointments with gigantic severance packages. He's also a bit of a walking trust buster: He's attempted to break up RJR Nabisco, and more recently, AOL TimeWarner into smaller corporations that focus more intently on key brands and strengths. So really, he's kinda like Teddy Roosevelt, only more evil because he's rich.

But what does this mean for the ailing Take-Two? Well, Icahn's sizeable chunk of stock means he'll definitely be a presence in future shareholder meetings. Additionally, he's a known business sage/pirate famous for restructuring ailing companies and taking them into the black in short order. Case in point: He turned a 300 percent profit on a $34 million investment in Samsonite, which means other investors did similarly well.

Take-Two is definitely ailing, and a lot of the blame could fall on the guys up top - lying twice about the content in GTA: San Andreas doesn't exactly inspire hope in investors' (or anti-legislation activists') hearts. Their stock has been in an absolute free fall. Until today, at least. According to the Gamesindustry.biz article, news of Icahn's buy-in raised Take-Two's stock price from $10.82 to $11.56. Ladies and gentlemen, Carl Icahn is in the building.

It's pretty safe to assume Icahn has a plan for where he'd like to see Take-Two to go. But at this point, it's just guesswork to offer any definitive ideas. One thing is for sure, though: Icahn won't be silent for long, and he's bound to ruffle some feathers up top.

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