Icahn Backs Out of Apple Buyback Proposal

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Carl Icahn, Herbalife, Netflix

Activist investor Carl Icahn has decided not to pursue his proposal to expand Apple’s (NASDAQ:AAPL) share repurchase program by another $50 billion. Icahn revealed his new position in an open letter to shareholders that he posted on his Shareholders’ Square Table website.

In the letter, Icahn cited the recent recommendation against his proposal made by proxy advisory firm Institutional Shareholder Services Inc. (or, ISS). “[W]e also agree with ISS’s observation, taking into account that the company recently repurchased in ‘two weeks alone’ $14 billion worth in shares, that ‘for fiscal 2014, it appears on track to repurchase at least $32 billion in shares,’” wrote Icahn. “Our proposal, as ISS points out, ‘thus effectively only asks the board to spend another $18 billion on repurchases in the current year.’”

Apple CEO Tim Cook recently revealed in an interview with the Wall Street Journal that the company had repurchased $14 billion of its own shares soon after it announced its fiscal first quarter earnings. Including the latest buyback, Apple has bought $40 billion of its own shares over the past twelve months.

Since the company has taken major steps toward Icahn’s capital return goals, the billionaire investor has decided to drop his share repurchase proposal. “As Tim Cook describes them, these recent actions taken by the company to repurchase shares have been both ‘opportunistic’ and ‘aggressive’ and we are supportive,” noted Icahn. “In light of these actions, and ISS’s recommendation, we see no reason to persist with our non-binding proposal, especially when the company is already so close to fulfilling our requested repurchase target.”

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