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Icahn-Led Faction Puts Heat on Time Warner

Dissident shareholders plan a proxy fight to seize control of the board. They say a 'deep restructuring' is needed to lift the stock price.

November 30, 2005|From Reuters

NEW YORK — Dissident Time Warner Inc. shareholders led by billionaire investor Carl Icahn stepped up their campaign against the media conglomerate Tuesday, saying they would launch a proxy contest to replace a majority of its board.

The dissidents also said they retained investment bank Lazard Ltd. to propose options for Time Warner including asset sales and "streamlining." They said "a very meaningful and deep restructuring" was needed in light of its lackluster stock performance.

"The Lazard name and ability means a lot," said Icahn, referring to the global financial services group led by veteran financier Bruce Wasserstein. "This is a major endeavor, and Lazard will be a great aid in the proxy fight."

Icahn cited Lazard's "really strong media team," access to shareholders and capital markets prowess for his group's choice in launching what he described as "an all-out proxy battle" against Time Warner management. He declined to disclose fees that Lazard was charging.

Time Warner reiterated the company's position Tuesday, saying through a spokesman that "we are confident that we are taking the right steps to deliver sustainable value and a highly competitive return to all of our shareholders."

Icahn -- whose group includes his own hedge fund and three others controlling 135 million shares, nearly 3% of Time Warner stock -- said Lazard "will immediately commence an in-depth strategic analysis" of the New York media company, whose properties include Internet service provider America Online, Home Box Office and Turner Broadcasting.

The move led by Icahn is the latest salvo in an increasingly acrimonious challenge to Time Warner, one of many targets the 69-year-old self-styled corporate activist has taken on in recent years. Sources said Icahn's group was looking to add to its position in the company to gain more clout and credibility in the proxy contest.

"It's the next move in the chess game," said Richard Steinberg of Steinberg Global Asset Management, which holds 31,000 Time Warner shares.

Shares of Time Warner closed down 22 cents Tuesday to $17.87.

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