Carl Icahn is not backing down on his quest to improve American International Group’s profit margins by attempting to break up the company.
The activist investor announced Tuesday that he intends to bypass senior leadership by arguing his cause, which would see
AIG split into three different companies, directly with shareholders. Chief Executive Peter Hancock has previously shot down this plan, saying it “did not make financial sense.”
Instead, Hancock has told investors and analysts AIG plans to take a middling approach and perhaps sell some business units, but insists he will not take a “machete” to the company. Neither will he sell prominent units, such as AIG’s mortgage insurance business, unless an appropriate offer is made.
Icahn, who is AIG’s fifth-largest shareholder, owns more than 42 million shares worth $2.61 billion, giving him a 3.4% stake in the company. He has told reporters that it has become “abundantly clear” that Hancock is not willing to “sincerely consider” the breakup plan, and hopes that other shareholders will approve his consent solicitation, which may include a proposal to replace Hancock as CEO.
Icahn is taking his proposal to investors now, as he says he cannot wait until the spring annual meeting date to raise the issue.
“AIG is too important, and the current situation is too time-sensitive, to wait years,” he said.
The move is an unusual one for a shareholder, and the
Wall Street Journal reports that only five such precatory proposals to break up a company have been put forward since 2009. Only three were successful.
Further complicating matters is Icahn’s plan to solicit votes by “written consent,” with only 26 such instances occurring in the past five years, according to FactSet.
In fact, the statistics group suggests it may be the first time a shareholder has attempted to combine the two.
A shareholder proposal requires a majority of all shares outstanding, and is not binding. However, analysts say such a vote would signal a “clear victory” for Icahn and be difficult for the AIG board to ignore.
AIG posted a $231 million net loss in the third quarter.
