King Icahn’s Crown stake invites regular activism
03/11/2022 16:31
(The author is a Reuters Breakingviews columnist. The opinions
expressed are her own.)
By Lauren Silva Laughlin
NEW YORK, Nov 3 (Reuters Breakingviews) - Carl Icahn is
back on the activist throne. The investor has taken a more than
8% stake in Crown CCK.N , the maker of aluminum cans and other
packaging goods, according to a U.S. Securities and Exchange
Commission filing on Thursday. After trying his hand at activism
that focused on female pigs’ health, Icahn is launching a
campaign that is classically him – and with high chance of
success.
Crown had a tough last quarter, which took Chief Executive
Timothy Donahue off guard. It partly was a pandemic shift –
drinking habits changed into and out of lockdowns, and companies
went from making too few drinks to too many. But analysts were
skeptical on Crown’s recent earnings call that it could live up
to expectations.
Donahue was appropriately contrite about missing a step, but
that is just the sort of vulnerability that Icahn loves. Plus
shares of the $8 billion company are down 36% in the past year
despite that it is still growing sales. Competitor Ball’s
BALL.N stock has fallen more. But at a forward
price-to-earnings ratio of 10 times, Crown’s multiple is a 40%
discount to its closest competitor.
There is some streamlining that Crown could do. While the
beverage container business makes up the lion’s share of the
revenue, so-called transit packaging – plastic wrap, industrial
film, and other similar products – contributed more than a fifth
of the company’s total revenue last year. And Icahn already
invests in the sphere of plastics products. He owns 89% of
Viskase Companies VKSC.PK , a pork casing firm that became a
point of contention earlier this year when Icahn took on
McDonald’s MCD.N .
In that campaign, he looked to replace directors because he
didn’t like the treatment of pregnant pigs. In the end,
McDonald’s shareholders voted against him, though the $200
billion fast food firm ultimately did overhaul parts of its
board.
With Crown, Icahn joins other noisy shareholders that have
become more vocal this year. Campaigns at U.S. companies are up
by almost 7% in the first three quarters compared to the same
period last year, according to research outfit Insightia. And
Crown is a better target than McDonald’s, which was larger and
didn’t have as clear a way to increase value. Successfully
pushing for an overhaul at the cans company might not invite the
same sort of reputational reinvention as one that called for
animal rights. But then again, that’s not exactly how Icahn
earned his activism coronet either.
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CONTEXT NEWS
Carl Icahn has taken an 8.5% stake in Crown, the beverage
can-maker, according to a U.S. Securities and Exchange
Commission filing on Nov. 3. The stake makes him the company’s
second-largest shareholder.
(Editing by Jennifer Saba and Sharon Lam)
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