Activist investor and corporate raider Carl Icahn is showing his investors that he will be able to keep making more and more money in his efforts ahead. This morning came news from Icahn Enterprises L.P. (NASDAQ: IEP) that the entity is increasing its annual distribution from $1.40, comprised of $0.40 in cash and $1.00 in depositary units, to $4.00 per depositary unit. What is interesting about the new distribution is that the new $4.00 is “payable in either cash or additional depositary units, at the election of each depositary unit holder.”
Carl Icahn said, “The new dividend policy reflects the confidence of the Board in the IEP business strategy and the strength of its operating businesses.” The board of directors of the general partner has declared a quarterly distribution for the first quarter of 2013 in the amount of $1.00, and each depositary unit holder will have until March 14, 2013, to make an election to receive either cash or additional depositary units.
The press release shows a holder who does not make an election will automatically be deemed to have elected to receive the dividend in cash. Icahn Enterprises will make a cash payment in lieu of issuing fractional depositary units to any holders electing to receive depositary units.
It should be noted that Mr. Icahn holds about 93% of the outstanding depositary units. He has indicated that he will elect to receive the increase in the company’s cash distribution in additional depositary units for the foreseeable future.
Today’s news is interesting considering that Icahn’s likely involvement in the Herbalife Ltd. (NYSE: HLF) case against short-seller Bill Ackman made him look so bad on his CNBC interview that turned into a cage-fight. Icahn also has been active in shares of Transocean Ltd. (NYSE: RIG), and he made serious money on his bottom-fishing activist efforts in shares of Netflix Inc. (NASDAQ: NFLX) due to its massive gains.
When companies raise their dividends, it is generally a sign that things will remain better, or that they have enough capital to both fund operations and to return capital to shareholders for years and years.
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