James W. Kinnear, Texaco's former president and chief executive, will never forget the first time Carl C. Icahn tracked him down--at the dentist's office. It was 1987, and Kinnear was having a tooth pulled. But Icahn was determined to get through. A Texas court had ordered Texaco Inc. to pay Pennzoil Co. a mammoth $10.53 billion for acquiring Getty Oil Co. because Pennzoil already had a deal with Getty. Texaco vowed to take the case to the U.S. Supreme Court and started Chapter 11 proceedings to protect its assets. But Icahn, after snapping up a 12% stake, demanded that Kinnear take immediate action. Within a week, Pennzoil and Texaco agreed to settle for $3 billion. And Icahn went on his way with a $600 million profit.
The triumph was classic Icahn. His knack has always been knowing just when to zig when the rest of the world is zagging. Whether speculating in junk-bond debt undervalued airline assets, or, more recently, shorting wildly inflated Internet stocks, Icahn has always bought when others are busy selling and the other way around. "Sometimes you come across something and you know it's a no-brainer," says Icahn, 64, sitting in Icahn & Associates' tony Fifth Avenue headquarters overlooking Central Park. Mixed amid the American fine art and antiques are leather-bound legal briefs and congratulatory letters from his many takeover deals, displayed like trophies of past victories.
But for years those trophies were gathering dust as Icahn's 1980s-style raiding became about as popular as an old Cyndi Lauper tune. The man who was demonized as a union-buster and the epitome of "greed is good" capitalism all but faded from the spotlight. During much of the 1990s, Icahn was occupied in the unglamorous work of bottom-fishing in the bond market and extricating himself from his controversial tenure as head of one of his conquests, Trans World Airlines Inc.
DEALS AHOY. But now, Icahn has come roaring back onto the scene. He's taking big stakes in companies ranging from J.C. Penney Co. to a string of bankrupt Las Vegas casinos. Last month, Icahn made his boldest bid in years--for Nabisco Group Holdings Corp., the 80.5% stakeholder in snack-food giant Nabisco Inc. His thinking is that irrational fears over tobacco liabilities have unfairly weighed the stock down. Selling the company to an outside bidder, he argues, is the best deal for shareholders. In a matter of weeks, his bid more than doubled the stock price, making a $350 million paper profit for himself in the process and forcing executives to put the company on the block. "The thing with National Biscuit is quintessential Carl," says Bear, Stearns & Co. Chairman Alan C. Greenberg. "He still likes the thrill of the kill."
What's reenergizing the infamous greenmailer of the 1980s, who's now worth an estimated $4.5 billion? As Icahn might put it, that's a no-brainer: He can smell easy money in the wind. After years of buoyant stock valuations, many old-line companies now find their shares depressed--and Icahn argues management is often the problem. That's giving him new reasons to wage war against corporate boards that he finds are still stuffed with pals of CEOs and antishareholder policies such as poison pills and staggered terms for members, making them difficult to overhaul. Armed with only a handful of analysts, lawyers, and assistants, Icahn is preying on boards that aren't measuring up. "What you want is accountability," he growls. And when it comes to the New Economy, Icahn thinks Net stock prices are still way out of whack. "I've made a lot of money from shorting them over the last six months," he says. He points to priceline.com, now selling at 39, which he shorted "all the way up to $160." Adds Texaco's Kinnear: "Conditions are ripe for someone like Carl."
In his private life, too, Icahn is making some big changes. Last year, following his long, drawn-out divorce from his first wife, Liba, he wed longtime employee Gail Golden. And now, his views on dot-coms notwithstanding, he's given Golden, 50, a senior position at Lowestfare.com Inc., the travel Web site Icahn launched with discounted TWA tickets as part of his take from the troubled carrier.
Given Icahn's dealmaking history, it shouldn't come as a surprise that he's at it again. Truth is, he's been cutting deals all his life. Though his mother, a teacher, and father, a lawyer, wanted Carl to become a doctor, he dropped out of medical school after two years and later joined a six-month army program--where he says he spun $300 into $4,000 through poker games. When he got out in 1960, Icahn got a job as a broker at Dreyfus Corp. with the help of his mother's wealthy businessman brother, M. Elliot Schnall. After getting wiped out in a 1962 downturn, he delved into the then-arcane world of options, publishing a weekly report on option prices. Says Icahn: "To win on Wall Street, you have to become a specialist."
A little help from the family didn't hurt, of course. Thanks in part to a $400,000 loan from Uncle Elliot in 1968, Icahn, then 32, bought a seat on the New York Stock Exchange and discovered the lucrative world of arbitrage. A decade later, Icahn turned to buying undervalued companies. Soon, pouring pressure on management became his signature style as he bit into bargains from Phillips Petroleum to U.S. Steel.
IN HIS WAKE. In 1986, though, Icahn discovered actually running companies isn't for him. At TWA, where years of Icahn as chairman left the airline in bankruptcy, employees couldn't agree more. Icahn, they say, slashed jobs, sold off routes, and raided the pension fund to make money at their expense. Says one union representative: "He raped us and left us for dead." Icahn says he kept the airline alive when others were folding and says he "never took a penny" from the pension fund. Says T. "Boone" Pickens, CEO of Mesa Water Inc. in Dallas and another 1980s raider: "Carl's pretty impatient."
Now, with his Nabisco maneuverings, which began as a flurry of investments in 1995, Icahn is back in his element. Insiders say the company would have found it tough to sell without an unsolicited bid. The reason: Regulators granted tax-free status to the stock that Nabisco Group shareholders received in a recent spin-off, R.J. Reynolds Tobacco Holdings Inc., on the understanding that the parent company wasn't scheming to sell for at least two years. "They needed a new situation and Icahn gave it to them," says Goldman, Sachs & Co. analyst Nomi Ghez. "You have to credit him for buying it when nobody else would touch it."
Risky as it all seems, Icahn is famously cautious. He personally double-checks the books to rule out surprises. And even onetime foes credit him with being rigorously honest, straightforward, and ethical. "He was always tough but fair," says financier Bennett S. LeBow. That may explain why he emerged from the 1980s unscathed by scandals, even with the downfall of junk-bond firm Drexel Burnham Lambert Inc., which backed some of his deals. Schnall calls his nephew "cautious to the point of insanity." Icahn says he's just careful.
CLOSE TABS. For this billionaire, any winnings, no matter how puny, are worth collecting. Becky Behnen, president of Binion's Horseshoe Casino in Las Vegas, recalls getting a letter from Icahn last year claiming several thousand dollars in winnings from a sports bet more than six months earlier. The next time he was in town, Icahn popped by the casino with his son, Brett, to claim the prize. "He was very gracious and gave me some advice about getting a loan," laughs Behnen, who now has to compete with three casinos that Icahn recently bought out of bankruptcy.
In personal matters, too, Icahn keeps an eagle eye on his money. When Icahn married his first wife, the Czechoslovakian-born Liba, in 1979, he insisted that she sign a prenuptial agreement. The couple had two children, but their marriage ended in a messy divorce after 20 years. Though she eventually settled for an undisclosed amount, for years Liba fought Icahn's offer of roughly $1.5 million a year when his net worth stood in the billions. Meanwhile, back in 1993, Icahn had moved in with Gail Golden, whom he married late last year as soon as his divorce to Liba was final. Says Golden, herself divorced with two grown children: "It was a painful time for all of us."
Now things could scarcely seem better for the happy couple. Golden has an elegant office down the hall from her husband. The pair travel together to Florida, Las Vegas, and East Hampton, N.Y., where they maintain homes, in addition to a duplex in midtown Manhattan. They avoid society parties, preferring to spend leisure time playing tennis or watching videos.
But Icahn didn't build his empire with a lot of R&R. And Icahn watchers can't help wondering what Icahn & Associates will be once he finally slows down. True, son Brett, now 20, worked last summer for his dad and hopes to one day take over the business. "We have very similar obsessive personalities," says Brett. But, as with every bet in his life, Carl Icahn needs to weigh the risks before making that kind of commitment.