Billionaire investor Carl Icahn, in a public letter to Apple Inc. Chief Executive Tim Cook on Thursday, urged Apple to start an immediate tender offer of $150 billion.
The letter, issued in conjunction with Icahn’s new website “Shareholders Square Table,” comes after Icahn urged Cook this summer to use Apple’s $150 billion in surplus cash to buy back company shares.
In the wake of Icahn’s letter, Bill Gross, co-chief investment officer at PIMCO and a prolific Tweeter, said via Twitter: “Icahn should leave Apple alone & spend more time like Bill Gates. If Icahn’s so smart, use it to help people not yourself.”
In a tender offer, a company offers to purchase some or all of its investors’ shares. Though tender offers usually come at a premium to the current share price, Icahn wants Apple to borrow money to make its offer at $525 per share, the level at which shares of Apple are currently trading.
In the letter, Icahn revealed he now owns 4.7 million shares of Apple stock, up from a previous total of 4 million. That means he owns nearly $2.5 billion worth of shares of the iPhone maker.
Apple is already in the process of spending $100 billion through 2015 on share buybacks, as well as dividend payouts. But Icahn believes Apple should increase its share buyback program and spend $150 billion on its share buyback.
In a twist to his proposal, Icahn said he will defer from participating in the tender offer.
“Per my investment thesis, commencing this buyback immediately would ultimately result in further stock appreciation of 140 percent for the shareholders who choose not to sell into the proposed tender offer,” Icahn said.
“Furthermore, to invalidate any possible criticism that I would not stand by this thesis in terms of its long term benefit to shareholders, I hereby agree to withhold my shares from the proposed $150 billion tender offer,” Icahn said. “There is nothing short term about my intentions here.”
(Editing by Bernadette Baum)