15.09.2014

Icahn moves into Hertz

The Hertz board of directors has capitulated to a threat from corporate raider Carl Icahn and offered him three seats on the board and a major say in the selection of the new chief executive.

Icahn has built up a stake of just 8.5 percent in Hertz and threatened a fight to take control of the business. Rather than face a fight Hertz capitulated and has offered him what he wants in exchange he will drop his plans for launching a proxy fight at the next AGM.

He has nominated Vincent Intrieri, Samuel Merksamer (both of whom he tried to force on Oshkosh in 2012) and Daniel Ninivaggi to replace three existing Hertz directors who will retire. Two of the Icahn directors will join a five man committee to find a new chief executive. The new board will comprise nine directors plus a new chief executive when he is found.

Hertz director Linda Fayne Levinson said: "The Hertz board believes that this outcome is in the best interest of the company and all Hertz shareholders. This agreement eliminates distraction and ensures that we stay sharply focused on delivering the significant potential of the business. Hertz is the clear leader in the rental car industry, and we will continue to take the necessary actions to fix the business. We look forward to executing on our strategic imperatives to create value for all our shareholders."

Icahn added: “I would like to thank the Hertz board for acting so expeditiously in agreeing to appoint our three very capable nominees to the Board. Since I believe that the most important person at a company is the CEO, I'm especially happy that two of our three nominees will be on the five-person committee to find a permanent CEO. It should be noted that our three nominees were on the boards and recently involved in identifying and recruiting top CEOs that have been very effective at a number of companies we have made investments in and where all shareholder value has been meaningfully enhanced. I believe Hertz is a great company and a great brand and that the right new CEO will return it to its former glory. We look forward to working with the Hertz Board to create value for all shareholders."

Vertikal Comment

While Icahn professes to represent the interests of all shareholders he is only interested in making a relatively quick buck for himself. Nothing wrong with that but his methods can be exceptionally disruptive for a company, and one has to ask why a shareholder with just 8.5 percent of a company’s shares should be allowed to virtually control the business?

You can be sure that while the Icahn directors are there to carry out Icahn’s instructions they will be very skilled in getting the board to vote for whatever Icahn wants. The sooner the Equipment business can escape from the Hertz corporation the better.