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Icahn Exercises Netflix Stock Options

20 Nov, 2012 By: Erik Gruenwedel

Carl Icahn

Activist investor Carl Icahn has exercised his remaining stock options, solidifying a 9.98% stake in Netflix.

New York-based Icahn paid $154.7 million for more than 4.2 million shares, which when coupled with the 1.3 million shares purchased Oct. 31, bring the investor’s total stake to more than 5.5 million shares for $323.6 million. That's $58.4 per share, according to a Nov. 19 regulatory filing.

Should Icahn’s (or any other investor’s) stake in Netflix reach 10%, an automatic shareholder rights plan (or "poison pill") kicks in, mandating that additional stock purchases cost $350 for one-thousandth of a share. The steep price is designed to thwart a hostile takeover.

Netflix enacted the shareholder rights plan after Icahn’s Oct. 31 stock purchase. The investor is renowned for buying shares in a company and then exerting pressure on management to make changes and/or sell the company.

Netflix co-founder and CEO Reed Hastings Nov. 16 told The Wall Street Journal that the subscription video-on-demand and by-mail disc rental service is not for sale and that it can make it on its own.

Meanwhile, Netflix shares rose 17% to close at $81.76 following the transaction. Shares were up 2.3% Nov. 20 in midday trading.

About the Author: Erik Gruenwedel

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