Icahn receives 2 directors appointed to vehicle equipment business Dana. What’s ahead

Icahn has huge expertise in the automotive business, now owning and functioning Icahn Automotive, which makes up 28% of the complete web product sales of Icahn Enterprises (“IEP”). Icahn Automotive was designed, in substantial section by means of acquisitions. Commencing as an investor in Federal-Mogul in 2001, Icahn eventually obtained the complete firm by 2017. Icahn also obtained significantly all the U.S. automobile components assets of Uni-Decide on, Inc., a top automotive elements distributor for domestic and imported cars Pep Boys – Manny, Moe & Jack, a main aftermarket company of automotive company, tires, components and equipment throughout the U.S. and Puerto Rico the franchise companies of Precision Tune Auto Care and American Driveline Systems. Icahn ultimately marketed Federal-Mogul to Tenneco in 2018 for $5.4 billion, and now Icahn Automotive is made up of Pep Boys automotive aftermarket retail and services chain, Car Moreover automotive aftermarket parts distributor, Precision Tune Automobile Treatment owned and franchised automotive service facilities, and AAMCO Full Car Care franchised company facilities. The corporations of Icahn Automotive complete over 22,000 personnel, above 2,000 organization-owned and franchise locations and 25 distribution facilities during the U.S., Canada, and Puerto Rico.  

Icahn is not only educated about this market, but he also has encounter with this enterprise. In March 2006, Dana declared Chapter 11 bankruptcy ,and Icahn obtained somewhere around $101.25 million of the firm’s then-$2.25 billion unsecured personal debt with the intention of getting an “energetic participant” in the individual bankruptcy circumstance. Icahn again grew to become an fairness owner in the fourth quarter of 2020 and submitted a passive 13G on Feb. 4, 2021 with a 7.5% ownership. His intent since improved from passive to energetic and he submitted this 13D upon getting two board seats at the company.

There is no question that Icahn’s two portfolio administrators, Brett Icahn and Gary Hu, will make benefit-added administrators as they not only have market practical experience, but are shareholder administrators – both on its individual is useful for a board member, but it is extremely unusual to have a director with both of those people attributes. So, if that is all Icahn does from an activist standpoint in this financial commitment, he need to be creating significant worth for shareholders. 

Nevertheless, it is difficult to ignore the elephant in the room. Icahn built his automotive market on acquisitions, and Dana appears to fit in really nicely in IEP’s automotive organization. Additionally, IEP states that its technique in its Automotive section is to continue to increase its business components gross sales and its automotive assistance company, and it will continue on to consider strategic alternatives in its automotive aftermarket areas organization to optimize worth. When Icahn obtained Pep Boys, he also mentioned: “We think that with our plentiful sources and awareness of the industry we will be ready to grow this organization and take edge of consolidation opportunities, therefore benefiting consumers, producing companions and employees, as properly as our shareholders.” So, it is hard to believe that that Icahn is not at minimum considering Dana as a likely acquisition or merger candidate. Even so, as an trader who has generally prioritized corporate governance and shareholder value, we expect that if he does obtain the company, it will only be immediately after a sales procedure by an unbiased financial investment bank and an arms-size negotiation in which the Icahn administrators recuse themselves.

Ken Squire is the founder and president of 13D Watch, an institutional analysis service on shareholder activism, and the founder and portfolio supervisor of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments. Dana is owned in the fund.