For the last several weeks, activist investor Carl Icahn has been waging a written war against eBay’s board of directors.
In particular, he’s been attacking the ethics of venture capitalist Marc Andreessen.
Andreessen keeps firing back with his own biting responses.
Today, he’s published another.
In a blog post, he’s written that according to Icahn’s current logic, Ichan would have been horrified at Icahn’s own business ethics back in 2005.
Icahn’s original accusation was that Andreessen is not loyal to eBay due to too many conflicts of interest.
His main evidence is that Andreessen’s VC firm profited big time when eBay spun out Skype. Andreessen Horowitz took a stake in Skype following the spin out in 2009 and it made bank when Microsoft bought it at a higher valuation in 2011.
Icahn believes that Andreessen wasn’t a good eBay board member because as an investor he had dual loyalties. He doesn’t think that Andreessen ever should have bought a stake in eBay.
Today, Andreessen is using Icahn’s own history against him. Back in 2005, Icahn was on the board of a company called XO, and yet he then purchased $US700 million worth of the business. The company was going to use that money to pay its debts and buy back its preferred stock. But at the time, Icahn also owned the companies that controlled all $US213 million worth of XO’s preferred stock, so XO would essentially be paying that money back to him. Icahn was buyer and seller, debtor and creditor. Without saying it outright, Andreessen is pointing out that what Icahn did in the 2005 XO deal is much more ethically questionable than what he did with Skype.
Here’s the full blog post:
Carl Icahn 2014 Would Take a Dim View of the Business Ethics of Carl Icahn 2005
Carl Icahn 2014, on eBay:
“I have never seen what looks to me to be such blatant disregard for fiduciary obligations to stockholders.”
Carl Icahn 2005, according to the Washington Post:
Carl Icahn is chairman of the board of XO and owns more than 60 per cent of the company, a telecom-crash survivor that provides telephone and data communications services for businesses, using conventional wires and new-generation wireless hookups.
Just over a week ago, XO announced it is selling the wired part of its business for $US700 million.
Selling it to . . . Carl Icahn.
XO said it will use most of the $US700 million it gets from Icahn to pay back its debts and buy back its preferred stock.
Debt and stock owned by . . . Carl Icahn.
Companies he owns and controls hold all $US213 million worth of XO’s preferred stock and more than 90 per cent of its $US392 million in debt, XO financial reports show.
The bottom line is that Icahn & company will give $US700 million to XO. Then XO will give $US600 million of that back to Icahn. He will end up owning XO’s traditional wired phone business outright. And he will still own his 60 per cent stake in what’s left of XO.
Buyer and seller, debtor and creditor, Icahn’s simultaneous roles may sound like potential conflicts of interest. But in Securities and Exchange Commission filings, XO explains that a special committee of its board of directors weighed Icahn’s bid and declared it the best of the offers the company got for its wired business. Investment bankers determined Icahn’s offer to be “fair.” The stockholders will have the final say — they must vote on the transaction before it can go through.
Of course, stockholder approval is a foregone conclusion. As the company noted in one of its filings, “Mr. Icahn owns sufficient shares of our common stock . . . to assure the approval and adoption” of what he wants to do.
And the directors named by Icahn hired the investment bankers who put their stamp of approval on his offer.
XO referred questions about Icahn’s role in all these maneuvers to his office in New York; Icahn did not respond.
Disclosure: Marc Andreessen, co-founder of Andreessen Horowitz, is an investor in Business Insider.