Skip to content
Matt Levine

Carl Icahn Wants an Oxydarko Vote

Also Facebook governance, airline competition, audit papers and ‘tuna.’

I generally appreciate Carl Icahn’s style, and one thing that I particularly appreciate is that he manages to hire lawyers who somehow share his sense of style. So Icahn is a big shareholder in Occidental Petroleum Corp., which recently agreed to buy Anadarko Petroleum Corp. It is funding the deal in part by selling $10 billion of preferred stock and warrants to Warren Buffett’s Berkshire Hathaway Inc. on terms that are, I think it is safe to say ( and I have said), quite lucrative for Buffett and expensive for Occidental. Another effect of the Buffett deal, besides costing a lot of money, is that it allowed Occidental to avoid holding a shareholder vote on the proposed merger: Without Buffett’s money, Occidental would need to issue a lot of stock to buy Anadarko, triggering a shareholder vote under New York Stock Exchange rules; Buffett’s money, though, replaces some of the stock and allows Occidental to sneak in under the voting threshold. “This is ... awkward,” I once wrote; structuring the deal to avoid a shareholder vote seemed to me like “a confession that (1) your shareholders don’t like the deal and (2) you don’t care.”

Icahn, as an Occidental shareholder, has had similar thoughts; as an activist shareholder, he is doing something about them. Specifically he sued Oxy yesterday. The actual thing he is suing about is pretty boring—he’s asking to inspect corporate books and records to prepare to mount a proxy fight—but Icahn’s complaint nonetheless rehearses all of his grievances about the deal with a surprising amount of voice and energy for what is, after all, a books-and-records demand. Icahn, for instance, hates the Buffett financing, arguing, accurately, that it is expensive, not tax-deductible, and gives Buffett valuable warrants to sweeten an already sweet deal. His complaint suggests that Occidental Chief Executive Officer Vicki Hollub got hoodwinked by Buffett: