Icahn reveals Hertz stake, says plans to push management over accounting issues
21 August 2014
Billionaire investor Carl Icahn revealed yesterday that he owned an 8.5-per cent stake in Hertz Global Holdings Inc and planned to pressure the rental car company's management over accounting issues and operational failures, Reuters reported.
According to a regulatory filing, Icahn, one of the most outspoken activist investors in the world, spent $470.5 million for the 38.8 million shares he owned.
Icahn said he might seek a board seat, something he had done at many other companies. The company last year adopted a so-called poison pill to forestall takeover moves by activist investors.
The company said in a statement yesterday that it welcomed dialogue with shareholders, was implementing new procedures and controls, and over the last few months had made "important additions" to its accounting and finance teams.
The company yesterday saw its stock slump 13 per cent as it withdrew its full-year financial forecast, blaming a shortage of cars due to motor industry recalls and an accounting error.
In March, the company announced, it would spin off its equipment rental unit as speculation over Icahn building up a stake in the company had grown.
The SEC filing showed that Icahn had been building a stake in Hertz using call options throughout July and August and added to that position on Wednesday after shares of Hertz plunged by some 11 per cent Forbes reported.
Icahn said in the SEC filing that he thought Hertz's shares were undervalued, adding, he intended to hold discussions with representatives of Hertz's board of directors about ''accounting issues, operational failures, underperformance relative to its peers'' and ''lack of confidence in management.''
Hertz had recently reported several problems, with the company on Tuesday evening saying earnings would come in ''well below the low end of its 2014 guidance'' due to ''operational challenges'' and costs related to its accounting review.
Hertz pointed out its rental car fleet had been adversely affected by vehicle recall activity limiting the number of cars it could rent to customers.
In June, Hertz said there were problems with the company's financial statements for the last three years that would needed to be corrected. Earlier this year, Hertz said it found tens of millions of dollars of accounting mistakes.