The Acquirer's Multiple: How the Billionaire Contrarians of Deep Value Beat the Market

by Tobias E. Carlisle

Icahn was not pleased. He bought another fifty-five thousand shares and called Blasius again. This time, there would be no mistake. Icahn told Blasius he liked Tappan as a takeover candidate. He said he had made a lot of money buying undervalued stocks. Many times, a buyout had doubled the stock price. He thought Tappan was a good target for a takeover. Still, Blasius didn’t understand what Icahn was telling him. Takeovers were rare in 1977. Icahn upped his holding to several hundred thousand shares and stepped up his efforts to find a buyer for Tappan. He also continued buying Tappan stock. By late 1978, his position was big enough to file a 13D notice with the Securities and Exchange Commission (SEC). A shareholder with more than 5 percent of a company’s shares must file a 13D if they plan to take over or liquidate the company. With the filing, Wall Street finally got the news that Tappan was in play. The stock price jumped. Icahn called Blasius to tell him an acquirer had called him wanting to buy his stock for $17. It was less than the $20 Icahn wanted, but he was thinking about selling. He also asked for a seat on the board. Blasius said no. Finally, he saw Icahn was a real threat. The company moved to issue stock to block a hostile takeover. This created a problem for Icahn. The new stock would stop him from being able to use his shareholding to push for a sale of the company. He had to put a stop to the new stock issue. Icahn responded by speaking to the press. He w...