Transocean Ltd. (NYSE: RIG) kicked off the week disclosing that investor Carl Icahn has taken a 3%-plus stake in its voting rights and will look to expand his position.
In a Monday 8K Securities and Exchange regulatory filing and reported online on The Wall Street Journal, Transocean revealed that Icahn now has a 1.56%-share position and a “synthetic long position” that corresponds to 1.7% of its shares. In addition, Icahn is seeking a position that is greater than the requisite $682.1 million threshold, which will undergo Federal Trade Commission antitrust reviews, while not going higher than 25% of the outstanding voting securities.
With Friday’s market capitalization of $19.4 billion, this dollar threshold would exceed about 3.5% of Transocean’s market value.
Is It A Good Time to Be a Stock Picker? Interview With Worm Capital
ValueWalk's Raul Panganiban interviews Eric Markowitz, Director of Research, and Dan Crowley, Director of Portfolio Management, at Worm Capital. In today’s episode they discuss their approach at Worm Capital and where they find opportunities. Q4 2020 hedge fund letters, conferences and more Interview with Worm Capital's Eric Markowitz and Dan Crowley
As a result of his latest transaction, Icahn has become one of Transocean’s top shareholders at 3.4% based on the Jan. 11 closing share price of $54.09, reported Bloomberg.
After the news, Transocean’s stock jumped 3.5% to $56 on Monday morning, hitting an intra-day high that was last seen in April 2012.
Michael Romer, an equity analyst at Bank Sarasin & Cie AG in Basel, said in a Bloomberg article, “The occurrence of the famous billionaire activist investor Icahn is likely to be a game changer for the firm. We expect Icahn ‘to put management under pressure.’”
Icahn’s latest action isn’t anything new as he likes to purchases companies with under-performing stocks and subsequently uses his position to push for changes.
In 2012, Icahn bought large shares in companies like Chesapeake Energy Corp. (NYSE: CHK) and CVR Energy Inc. (NYSE: CVI) and then lobbied for new boards of directors.
As for the possible change that Icahn could make with Transocean, he will sit behind its largest shareholder, Capital Group Companies Inc – which has a 4.92% share valued at $995.7 million. Then there’s Franklin Resources (NYSE:BEN), which is currently sitting in the second spot with a $524.6 million stake.
The timing of Monday’s announcement is interesting and seems “Ichan-like” since Transocean agreed to pay $1.4 billion in penalties on Jan. 3; the penalties were a result of for the 2010 Gulf of Mexico oil spill. The company’s shares have shed more than half of its value since the spill. Even after Monday’s initial boost, the company continues to see its share price down approximately 40%.
According to Bloomberg, the company remains dominate in the Gulf of Mexico’s deep-water drilling market, despite the 2010 disaster. Transocean is the biggest stake holder and is currently operating 14 of 37 rigs in the Gulf, for water depths at a minimum of 1,000 feet (305 meters), according to Dice Holdings Inc, a tracker of global offshore rig data.
What type of change will we will see for the company in 2013 from the Icahn effect?