By on February 29, 2016

Carl Icahn caricature (Image: Insider Monkey/Flickr)

Billionaire businessman and activist investor Carl Icahn wants to snatch up the last bits of Federal-Mogul Holdings Corporation he doesn’t already own, Automotive News reports.

The 80-year-old tycoon already owns an 82 percent share in the Southfield, Michigan-based global auto parts supplier, where he serves as chairman, but his recent offer of $7 a share could net him full ownership.

Proving what a savvy investor the guy really is, news of the offer made by Icahn Enterprises propelled Federal-Mogul’s stock into the upper stratosphere. The bid is under review by the corporation’s board, and will need to win majority approval in order to get the green light.

Should it be approved, there’s little doubt it will push Icahn’s net worth — estimated at more than $18 billion at the end of February — even closer to Mr. Burns levels.

The century-old Federal-Mogul owns a laundry list of aftermarket brands, among them Wagner brake parts and Champion spark plugs, and recently chose to terminate a spin-off of its Motorparts division. Pulling back from an earlier decision, the corporation’s two business divisions will remain independent, with their respective CEOs reporting to Federal-Mogul’s board.

Suffice it to say, Icahn has been having a good run lately. He ended 2015 by winning a bidding war for ownership of parts and repair chain Pep Boys with an offer valued at around $1 billion, and just three days ago bought Donald Trump’s bankrupt Taj Mahal casino in Atlantic City.

That last acquisition might be a riskier investment than the others, but hey, you’ve got to spend money to make money.

[Source: Forbes, Wall Street Journal] [Source Image: “Carl Icahn” (CC BY-ND 2.0) by Insider Monkey]

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61 Comments on “Carl Icahn Wants It All...”


  • avatar
    FreedMike

    If you’re from St. Louis, there are four names that will send you right into torch-and-pitchfork mode:

    1) Stan Kroenke
    2) Don Denkinger
    3) Bill Bidwell

    And the fourth is none other than Carl Icahn, which took one of the area’s largest employers (TWA) and destroyed whatever was left of it.

    (And I think you can probably add Jason Heyward and John Lackey to the list, now that they’re both acolytes of Clark the Cub…)

    • 0 avatar
      CoreyDL

      I thought Flight 800 was what took care of the struggling TWA.

      • 0 avatar
        FreedMike

        Icahn was out at the time that crash happened, but not before he sold off the airline piece by piece. And even after he sold them, he screwed them – he forced them to use his company for a huge percentage of their bookings. By the time American bought TWA, there was basically nothing left.

        Losing TWA was a huge blow to the area, particularly north St. Louis county, where the airport is. The airline was a huge job generator for the area – it was a hub, and a major maintenance base. A lot of its employees lived in the area of the airport. Then the former McDonnell Douglas plant slowed down, and Ford closed down the Explorer plant. The whole area around the airport declined badly in the wake of all this. Before all this, it was basically a working class neighborhood, but after all those jobs left, people who could move out did.

        The economic and racial issues this caused were part of the genesis of what became the Ferguson riots.

        Losing TWA definitely played its part.

        • 0 avatar
          CoreyDL

          Interesting historical perspective. I recall thinking St. Louis was crimey and dangerous when I was there in… 1994 or so. We stopped at a McDonald’s at night at the WRONG part of town (south side of river, nearly in view of arch?). And I was in the car by myself watching things happen in the parking lot. I was eight!

          • 0 avatar
            FreedMike

            On the Missouri or Illinois side?

            If you were on the Missouri side and south of downtown, that’s not bad – that’s where the Budweiser brewery is.

            But if you were on the Illinois side…or on the Missouri side and the Arch was to your south…you should have been in an up-armored Humvee.

          • 0 avatar
            CoreyDL

            You made me curious, so I looked up McD’s locations in STL which are near the river. Narrowing it with what I remember from the parking lot, I think it was here.

            1119 N Tucker Blvd, St. Louis, MO 63101

            The Arch is to the south!

          • 0 avatar
            FreedMike

            Yeah, not the greatest spot, Corey. That’s on the north edge of downtown, and the St. Louis cops patrol the hell out of the office / nightlife / sports / convention center areas. But a few blocks north and it’s basically Thunderdome, just without Tina Turner and the creepy “dyin’ time’s here” guy.

            St. Louis has some hardcore bad neighborhoods. Folks here in Denver talk about how bad a neighborhood is and I just smile politely. The bad neighborhoods here just look unkempt and trashy – go to the north side of St. Louis and there are areas that look like something out a postapocalyptic movie, with abandoned collapsed buildings, out-of-control weeds, brownfields, you name it. A lot like Detroit.

            I love my hometown but it’s pretty much a basket case these days.

        • 0 avatar
          VoGo

          TWA’s demise is a pity. If you look at a map of the US, weighted for population density, St. Louis is the perfect place for an airline hub.

    • 0 avatar
      28-Cars-Later

      I don’t know who those people are but I’ll add my pitchfork. To the gallows with them!

    • 0 avatar
      Grahambo

      I am a born and bred St. Louisan who left for a number of years for school and job and returned over a decade ago. I am, in fact, originally from NoCo but, since returning, have lived in a “nicer” part of town. FreedMike is spot on with all of his assessments. I absolutely love STL but the airport situation (among other things – the City/County split, for example) has been holding it back economically and otherwise for some time now and that can be traced directly back to Icahn. I remember flying direct from STL to London years ago. No longer. I will say that Bidwill really doesn’t seem so bad anymore (his son has done a great job with the now-Arizona Cardinals) and, if we are being objective, probably doesn’t belong on that list. Likewise, Denkinger was not a bad guy and apparently had remorse for what was a split second judgment call — albeit an unquestionably poor one. But Kroenke and Icahn are peanises of a pod.

      • 0 avatar
        FreedMike

        Denkinger will live in infamy forever.

        I was at a Rockies – Cards game at the end of the 2013 season, and about half the fans at the stadium were wearing red. A bad call was made and someone shouted out “Denkinger!!!!”

        And about EVERY Cards fan started laughing.

        I doubt Denkinger was laughing when JC Corcoran gave out his home phone number, tho…

  • avatar
    Jeff Waingrow

    Savvy investor? That’s not how I would characterize him. Better to say corporate raider, a guy who made a career of sucking life out of one business after another, leaving many of them for dead (and him wealthy). He supposedly makes companies more efficient. Were it only so. He makes Romney’s Bain operation look like a Mother Theresa charity. The guy’s a vampire.

    • 0 avatar
      johnny_5.0

      Having worked for a company impacted by his shenanigans, I’d say that last sentence is a pretty succinct description. Split up companies for IPO fortunes, all while knowing that the pre-IPO cuts to make the numbers look even better will be too deep. But f*ck it, short term rewards over long term strategy right?

  • avatar
    IHateCars

    I thought he was going to help Trump kick a$$ and take names when he becomes POTUS?

    • 0 avatar
      highdesertcat

      Hah! Trump won’t be POTUS. The GOP is in panic mode right now and frantically trying to find a way to give the nomination to anyone else.

      Hillary will be the next POTUS because every woman in America, including my own, will want to see the first woman POTUS.

      • 0 avatar
        johnny ro

        Thank your highdesertcat for reminding me to place weight on Hillary’s female status in my election forecast.

        Its obvious of course but I neglected it until right now.

        • 0 avatar
          highdesertcat

          I would have voted for Hillary in 2008 but not today. Too much baggage.

          As an Independent, I have no dog in this fight. Don’t like any of the GOP either.

          I’ll be voting for Gary Johnson, again.

          I know for a fact, my wife, my daughter and two grand daughters will be voting for Hillary, for the reason I stated above.

          And they have been excellent predictors in past elections.

      • 0 avatar
        IHateCars

        “Trump won’t be POTUS.”

        I really hope that you are right. But viewing the current political landscape unfortunately makes me think otherwise…

        • 0 avatar
          FreedMike

          In order to win a national election, you need the support of women and Latinos, and Trump has ticked off enough of both groups to render himself un-electable.

          And he’s also the left wing base – i.e., the Sanders supporters – so thoroughly that when Hillary wins, they’ll support the hell out of her simply to keep Trump out of office.

          So, he deprives the GOP of female and minority voters, and delivers the leftist vote to Hillary. And if he loses the GOP primaries, he’s liable to run as an independent.

          The man is a gift to Democrats. You heard it here first.

          There has been speculation he’s a Democratic Manchurian candidate and sometimes I wonder…but in the end, Trump is about Trump and I think he’s really enjoying the endless echo chamber of his own voice.

          (Or Sanders does a Nader after he loses – which I’d say is darn likely – in which case all bets are off.)

      • 0 avatar
        FreedMike

        Hillary won’t win because she’s a woman. She’ll win for the same reason Obama won in 2012: the GOP won’t choose an electable candidate until it’s too late. The Republican Party did a far better job defeating Mitt Romney than the Democrats did, in my opinion.

        • 0 avatar
          mcs

          Geez, I was hoping this was going to be Vermin Supreme’s year. Oh well.

          http://www.youtube.com/watch?v=lrDDkKPUFa4
          http://www.youtube.com/watch?v=4d_FvgQ1csE

  • avatar
    CoreyDL

    Why would he want the Taj Mahal? Expecting some big resurgence of A.C.? Doesn’t seem at all likely.

    The story of Atlantic City is an interesting one – a city slowly destroyed by corrupt city planning officials and poor management.

    • 0 avatar
      heavy handle

      Why would he want the Taj Mahal? I suspect that it was very cheap. The previous owner has come into some prominence of late and doesn’t want his name associated with business blunders.

      He will flip it at a handsome profit. Knowing his reputation, he may have a deal lined-up already.

      • 0 avatar
        CoreyDL

        I wonder if the Trump Plaza in AC has still got his name on it? That one wasn’t owned by him since the ’80s, IIRC. He had just licensed his name.

        • 0 avatar
          Lorenzo

          Someone brought that up, since Trump claimed to own 10% of Trump Plaza. Looking into the deal, the researcher found out Trump really is entitled to 10% of any profits realized when the current owners/creditors sell it, assuming it can be sold at a profit.

          There are other details involved with the deal that forced Trump out of ownership, but 10% of potential profits is a far distance from owning 10% of the value, and might be how Trump makes his claims to be a billionaire. Trump’s current claim is that his net worth is up to ten billion.

          • 0 avatar
            highdesertcat

            “Trump’s current claim is that his net worth is up to ten billion.”

            A lot of that could be “not realized net worth” until he actually sells it for what he thinks the property is worth, and gets paid for it.

          • 0 avatar
            Lorenzo

            hdc, analysts have noted that Trump never puts all his own money into his projects. All the properties he “owns” are so heavily leveraged that most of the money at risk is investor or financial (bank) money, not his own. That’s how most wheeler-dealers make their fortunes, with other peoples’ money.

            They use the successes to leverage new investors in new projects; when deals go sour, others are saddled with most of the debt/liability. His deals are so complicated and thorough in maximizing assets as collateral (borrowing against them) that there’s likely no unrealized equity left.

            That’s not to say he isn’t rich. Another site noted he had a $200 million net worth in 1982. If he just got returns equal to an index to the S&P, he should have about $8.4 billion. But his investments are nothing like an index fund. That $200 million adjusted for government-calculated inflation is over $700 million today, and the CPI calculation was changed in the 1980s to understate inflation and reduce future government COLA payments.

          • 0 avatar
            CoreyDL

            One of the city planning fails on the Trump Plaza is how it cannot legally be used for anything other than a casino for some ridiculous time span. It’s in the original zoning. So now you’re stuck with a casino shell nobody wants/can use – sitting vacant until the time requirement falls off.

    • 0 avatar
      PandaBear

      Maybe he is paying Trump? You can’t bribe someone legally so you have to buy something and overpay.

      • 0 avatar
        highdesertcat

        Don’t we all overpay when we buy a house, a home, a car?

        • 0 avatar
          28-Cars-Later

          Speak for yourself.

          • 0 avatar
            highdesertcat

            I’m asking a question.

            Maybe there are people here who routinely force sellers to sell at a loss.

            If so, I would like to learn their tactics.

          • 0 avatar
            Lorenzo

            I doubt anybody has the negotiating tactics to force anybody to sell at a loss, though there are conditions in which some people DO sell something at a loss, some people modestly overpay to get what they want, some overpay a lot because they can, to get what they want, and some dumb shlubs luck into bargains being in the right place at the right time.

            A friend of mine is such a shlub. his girlfriend talked him into buying a new house in 1998, for $200,000, in a decent development in southern California. The value rose to $800,000, dropped to $400,000, and now stands at about $700,000. He was talked into refinancing when rates dropped under 5%, and his mortgage, tax and insurance is now less than the current rent on his old apartment. Fortunately, he too dumb to realize he can borrow against that half mil in equity, and likely won’t lose his house when the current real estate bubble pops.

          • 0 avatar
            28-Cars-Later

            Ah, my mistake. In my experience with automobiles, its ultimately about leverage.

          • 0 avatar
            Lou_BC

            Lorenzo – borrowing against home equity is one of the contributors in the 2008 meltdown. As you have shown with your friend’s place, market values fluctuate. If all he wants is a nice place to live he is better off just paying it off.

            My house has seen similar fluctuations. A few years after I purchased it was worth about 30k less than what I paid for it. It currently is assessed at almost double its initial value.

  • avatar
    NoGoYo

    …and he wants it now?

  • avatar
    CincyDavid

    I had to look up Don Denkinger…not much of a baseball fan.

    I might argue that August Busch III and IV are villains too…treated AB like their private fiefdom, living like the Kings of Beer, until InBev swooped in and took it. I understand the the Busch family only owned something like 2% of the company, Busches, Orthweins, and all of the other cousins combined…you would have thought it was privately held.

    • 0 avatar
      Xeranar

      The busches like most family businesses that size had long ago sold off majority stakes for the immediate gains but were effectively the controllers because they could collectively name board members while institutional investors were too happy to let them do it. In all honesty, how inBev managed to merge with them is beyond me but I’m sure the right wheels were greased OR the DoJ really thinks microbreweries can regulate their power.

      It seems pretty unrealistic unless they set strong market laws that prohibit them from doing what they did for decades…That is, buy out every stock inch of a store for their own products and leave nothing for the rest.

      • 0 avatar
        VoGo

        The DoJ let it go because the merger really didn’t increase market dominance for InBev/AB, since InBev had almost no market share in the US.

        How many people do you know drink Stella Artois?

        • 0 avatar
          wmba

          I do. Amazing how Stella spawned InBev, who were acquired by 3G Capital and now they own AB, Coors and Millers, plus every other major brewer of any note in the whole wide world bar Guinness and a few other Europeans. Now there is indeed market concentration, so the DOJ was outflanked.

          I used to favour craft beers but have gone off them in the last 20 years since the art of such brewing seems to devolved into how many tons of hops can be dumped into the product. Some finesse is required.

          • 0 avatar
            NoGoYo

            I really wish not everything was an IPA because I just don’t like hops much. I usually drink Rolling Rock…

          • 0 avatar
            johnny ro

            The only bottled beer I would consider drinking here in the USA is made by Samuel Smith, Tadcaster England. Don’t know where to buy Ringnes.

            Sorry this basically includes Guinness Stout by now.

            Brew my own these days.

            Well OK, for June-August lawn mowing, PBR is acceptable. In 24 oz cans. The cans are good for plinking.

          • 0 avatar
            Lorenzo

            Miller and Coors are owned by SABMiller – South African Brewers, another monster conglomerate, One of four global brewers that competes with the company now known as Anheuser-Busch InBev. I wouldn’t be surprised if the A-B extended family still has a finger in the new parent company.

        • 0 avatar
          Xeranar

          In anti-trust cases they do tend to look at global markets as well since the Molson-Coors-Miller alliance is a strategic strengthening.

          From what I’ve read is that as beer consumption shifts the InBev-AB purchase had less benefit than appearance simply because people consume about the same (and actually decline a bit in some markets) while switching to microbrews and local breweries. It’s an interesting and complex argument. Arguably since I moved away from a beer distributor state (which is sad, I actually prefer not wasting food store space on liquor) the shift in market power is dramatic. In 2013 local brews were at most 10% of the aisle, now they’re atleast 40%. I imagine in a decade they’ll be closer to 60-70%.

  • avatar
    Vulpine

    Considering the man’s age and the probability of the company going completely private with his takeover, what happens to the company when he dies? This, of course, assumes he doesn’t sell off pieces of it before then.

  • avatar
    APaGttH

    Another too big too fail enterprise in the making.

    We own the parts makers and the distribution channels. We can put the same stuff in different boxes and sell it at various prices, and crush the competition.

    We all lose.

    There is capitalism and free market, but what is happening today is semi-monopoly consolidation that stiffles innovation, competition, and quality. Once you own the brands and the channel, you don’t have to give a you know what anymore.

  • avatar
    Jeff S

    Vulpine, there always the Chinese looking for another automotive business to buy out. Icahn still has enough time to sell pieces off.

  • avatar
    Xeranar

    Carl Icahn is a prime example of how capitalism is fundamentally broken. He used established wealth to buy more wealth that will simply increase his wealth. If I buy a lathe and food, I can make wood products. If he buys the furniture company he just makes the profit from the company. The scale of his capital is so wildly out of hand that any discussion of him in a positive light of being ‘savvy’ is effectively a waste of words.

    • 0 avatar
      VoGo

      How is Carl Icahn established wealth? His mother was a school teacher and his father a substitute teacher. Sounds pretty Horatio Alger to me.

      • 0 avatar
        Xeranar

        I’m talking about this action here today. I’m not talking about his ‘investment history’ which is checkered with other people’s money. Alger he is not unless we want to accept that Alger got there even in his story’s through the power of others.

      • 0 avatar
        JimZ

        you could say the same about Martin Shkreli, as have some of the stories talking about his “net worth” of $45 million. But all that came from conning other people to let him play with their money.

    • 0 avatar
      highdesertcat

      Xer, are we talking about the same Carl Icahn? I believe the Carl Icahn in this article to be the corporate raider, business man and entrepreneur.

      He made his wealth pretty much the same way George Soros did, through prudent investment, speculation, sale and reinvestment. And, of course, leverage.

  • avatar
    swester

    Sometimes I wonder: when you’re 80 years old and already have ludicrous amounts of money, why would you spend your time still focusing on ways to make even more?

    At that point, I’d be far more concerned with spending it fast enough.

    • 0 avatar
      highdesertcat

      Have you ever played “Monopoly”?

      This is how the Big Boys play it in the real world.

      Why do people climb Mount Everest? Why do people take over whole companies?

      Because it’s there.

    • 0 avatar
      JimZ

      you’re trying to figure out the minds of sociopaths, and if you can’t figure it out, congratulations. you’re not a sociopath.

      • 0 avatar
        Lou_BC

        @JimZ – unfortunately the definition of sociopath or psychopath is often based upon your wealth or whom you work for.

        If you are wealthy you are a shrewd business man, poor you are one of the above.

        If you are a wealthy singer i.e. Michael Jackson you are just eccentric. Poor, just fVckin’ nuts.

        If you work for the CIA you are a valuable skilled asset. Anyone else;demented serial killer.

    • 0 avatar
      NoGoYo

      It’s gonna stay in the family until Jr or The Third loses it all, so why not make yourself a mint before you die?

      • 0 avatar
        Lorenzo

        There is no Carl Jr. that’s a restaurant. Carl’s son Brett works for him and is into films/media, having spearheaded the takeover of Lion’s Gate, along with several other defunct companies with film libraries. Brett has control over films like Total Recall, the Rambo series, and Earth Girls Are Easy, so be very afraid when Brett takes over.

  • avatar
    MatadorX

    As someone who repairs vehicles frequently, and is VERY familiar not just with aftermarket part brands, but the suppliers these brands utilize, this is very bad news indeed.

    It is utterly shocking the direction some of the Federal Mogul brands have taken as of late. Moog, once the paragon of quality in the suspension part game with actually improved parts vs what OEM makes (imagine that), has undertaken a strategy beginning in 2011 to simply buy white box Chinese parts like literally EVERY other aftermarket brand, and slap their label on it. The “problem solver” moniker has gone by the wayside. Now Moog parts are creating more problems than they solve by high failure rates. They began this change by phasing in a budget “R-Series” line that was purported to be sold along side the more expensive problem solvers. Surprise surprise, there have not been any new problem solver parts added to the catalog since, and those that existed are nearly sold out, never to be replenished.

    It is the same story in their other brands. Bearing production was all shipped to India around 2011, any remaining problem solver production is in Mexico now and is limited to smaller parts like tie rods, not control arms. Anything still made in USA is basically old stock, that has be reboxed in their latest boxes. I didn’t realize it at the time, but back in 2011, I was buying up the last USA strut rod bushings and steering parts, all made back in 1997 just put in the latest box to make it look like they were still being made.

    It’s driving those that want actual quality to OEMs, but in the case of American cars, OEMs have nothing to offer but “NLA” on necessary parts that no one supplies a quality version of anymore.

  • avatar
    Jeff S

    Outsourcing of production of auto parts to cheaper labor markets has been going on for a number of years. Even the auto manufacturers have outsourced parts to cheaper labor markets such as China and India. I am not saying this is good or bad but I cannot blame Icahn for increasing his stake.


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