Truck maker Oshkosh Corporation (NYSE: OSK) has recently spurned activist investor Carl Icahn’s $3 billion unsolicited takeover offer while engine maker Navistar International Corp (NYSE: NAV), which avoided a proxy fight with Icahn by giving him more board representation, is reportedly consider a sale but investors might want to ask if stocks like Motricity (NASDAQ: MOTR), WebMD Health Corp. (NASDAQ: WBMD) and Forest Laboratories (NYSE: FRX) aren’t also on the acquisition target list. That’s because Icahn has either increased his holdings in them or he has waged proxy battles with their management. Moreover, all three of these companies have good reason to incur the wrath of an activist shareholder given their performance lately. Hence, should Motricity, WebMD Health Corp. and Forest Laboratories be on your acquisition list? Here is a quick look to help you decide:
Motricity (NASDAQ: MOTR): Icahn Now Owns Around On-third of the Company
Motricity is a leading provider of relevance-driven mobile merchandising, marketing, and advertising solutions that allow advertising agencies, consumer brands and mobile operators to deliver mobile optimized customer interactions. Carl Icahn recently increased his holdings in Motricity by around 157% earlier this month in a transaction of 1,146,131 shares and he now owns 30.7% of the company. Hence, Icahn controls approximately 14.7% of the voting power of Motricity’s common stock and he now holds 1,146,131 shares of Series J Preferred Stock – roughly 95.5% of that class of stock which comes with limited voting rights. Icahn increased his stake by buying into Motricity’s rights offering that raised $28 million for the company. On Friday, Motricity closed at $0.73 (MOTR has a 52 week trading range of $0.36 to $1.97 a share) for a market cap of $37.71 million plus the stock is down 18.9% since the start of the year and down 92.1% since the middle of 2010. That probably means that long-term investors have nothing to loose if Icahn takes over.
WebMD Health Corp. (NASDAQ: WBMD) Is Still Thwarting Icahn With a Poison Pill
WebMD Health is a provider of health information services to consumers, healthcare professionals, employers and health plans through its public and private online portals, mobile platforms and health-focused publications. Last November, WebMD Health adopted a poison pill after Icahn made a filing with the SEC revealing he was pushing WebMD to spend up to $1 billion to buy back its shares through a Dutch tender offer. Icahn is the largest shareholder in WebMD Health with a 13% stake and he believes the company is undervalued from a long-term perspective. However, WebMD Health also swung into a loss the last time it reported earnings as advertising and sponsorship revenue sank 23%. On Friday, WebMD Health closed at $15.43 (WBMD has a 52 week trading range of $13.26 to $40.24 a share) for a market cap of $773.41 million plus the stock is down 58.9% since the start of the year and down 66.6% over the past five years. Hence, maybe shareholders would be better off if Icahn took over WebMD Health and shook things up a bit.
Forest Laboratories (NYSE: FRX) Has Been Criticized by Icahn
Forest Laboratories develops, manufactures and sells branded forms of ethical drug products that will often require a physician's prescription. In the past, Carl Icahn has criticized Forest Laboratories as ill-prepared to generate new growth as its top products face increased competition. Moreover and last August, Icahn secured one of the four board seats he was seeking after after a bitter proxy battle. Forest Laboratories also reported earnings a few weeks ago and had reported a net sales fall of 38.8% to $692 million (Lexapro, which lost patent protection back in March, saw sales sink 93% to $44.7 million) while net income sank from $249.8 million to $20.8 million. On Friday, Forest Laboratories closed at $34 (FRX has a 52 week trading range of $28.47 to $37.70 a share) for a market cap of $9.08 billion plus the stock is up 12.9% since the start of the year and down 12.3% over the past five years.
The Bottom Line. Of course, conservative investors should never speculate that troubled companies like Motricity, WebMD Health and Forest Laboratories are going to find someone like Carl Icahn to save them (as in the shareholders) as he will first look out for his own interest but those who are traders with a stomach for risk should be taking notice.