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Icahn Taps Lazard in Time Warner Battle

Corporate raider Carl Icahn has turned up the heat in his battle with Time Warner Inc., hiring investment banker Lazard Ltd. to identify strategic alternatives and identify a new slate of directors for the media giant.

Icahn put out a press release saying his Icahn Partners and three other investors — Franklin Mutual Advisers, JANA Partners and S.A.C. Capital Advisors — hired Lazard to conduct an in-depth analysis of Time Warner’s business and identify potential strategic alternatives for the media giant, including “a streamlining of its corporate structure, reconfiguration of its assets, potential sale of selected businesses, adoption of a more appropriate capital structure and commencement of a significant share repurchase.”


In the release, Icahn said Lazard will also assist in identifying a slate of directors — which would replace a majority of Time Warner’s current board — to be presented at Time Warner’s next annual meeting of shareholders.

Hiring Lazard gives added credence to Icahn’s efforts and enlists one of the media industry’s consummate deal makers — Lazard chairman Bruce Wasserstein — into the negotiations.

Wasserstein — in his old firm, Wasserstein, Perrella & Co. — was one of the advisers to Time Warner’s $165 billion mega-merger with America Online Inc. in 2001.

“Time Warner has a unique set of valuable assets and our assignment is to help determine how best to realize the full value of these assets. We look forward to working with the Icahn Group to help maximize value for all Time Warner shareholders,” Wasserstein said in a statement.

Icahn began making waves at Time Warner in early August when he disclosed that Icahn Partners along with the three other funds had accumulated Time Warner stock and options worth about $2.2 billion on the open market, or about 2.6% of Time Warner’s total shares outstanding.

Earlier this month, Time Warner seemed to bend to some of Icahn’s wishes, saying it would more than double funding for a share-buyback program to $12.5 billion from $5 billion. But Icahn — who favors a $20 billion buyback and the total divestiture of cable operations — has said in published reports the new share-repurchase plan was inadequate.


“We have brought in Lazard to complete an in-depth study of Time Warner and how shareholder value can be enhanced,” Icahn said in a statement. “It is our contention that it is only through a very meaningful and deep restructuring and share buyback program that all shareholders will be able to realize the true value of Time Warner.”

Time Warner stuck to earlier statements that it was working hard to increase shareholder value.

“Our Board of Directors and management are confident that we are taking the right steps to deliver sustainable value and a highly competitive return to all of our shareholders,” Time Warner said in a statement. “Our businesses are performing well, and are all leaders in their sectors. We are committed to returning capital to shareholders while maintaining the capacity to grow our business, and during the past year we initiated a $12.5 billion stock repurchase program and cash dividend. We look forward to continuing strong performance in 2006.”