Carl Icahn Wants It All
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]
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.
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.
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.
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.