Investor Icahn wants Apple to make $150 billion tender offer for the company's stock

Investor Icahn wants Apple to make $150 billion tender offer for the company's stock
Investor Carl Icahn has just scored a better than 400% profit after dumping his shares in Netflix. Now, he is turning his attention to Apple. The former "greenmailer" has written an open letter to Apple CEO Tim Cook urging Apple to make an immediate tender offer for $150 billion of Apple stock at the current price of $525. A tender offer at that price would allow Apple stockholders to sell their holdings back to the company which would lower the number of shares outstanding. This would raise the company's earnings per share figure which should lead to a higher stock price.

The long time stock market trader even computed that by borrowing the entire $150 billion at 3% and using the money to buy back the stock, it would produce an immediate 33% boost to Apple's earnings. That, said Icahn, would lead to an immediate 33% jump in the price of the stock assuming no change in the company's P/E ratio. The one time raider, who managed to avoid getting caught in the Michael Milken-Ivan Boesky insider trading scandal that defined the market in the 1980's, sees Apple's shares rising to as high as $1250 assuming that the shares receive a normal valuation instead of the discount they now have.

This isn't the first time that Icahn has tried to get Apple to buy back its stock. Back in August, he suggested the same plan to Apple via a tweet and subsequently met with Tim Cook. Icahn now holds 4.7 million shares of the Cupertino based tech titan which means that he added 700,000 shares recently. His stake is now valued at $2.5 billion. Cajoling companies that he invests in to buy back stock or take other moves to push up the stock price is how Icahn makes his money. So far though, Apple has refused to follow the investor's game plan and there is no indication that it will. Icahn has told a television audience on Thursday afternoon that he would consider asking shareholders to vote on his plan via a proxy vote which would force Apple executives to buy back the stock. Stay tuned!

The lengthy open letter from Carl Icahn appears below.

source: AppleInsider
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