News that Carl Icahn has taken a stake in Netflix caused the company’s stock to shoot up from $70 to roughly $84, only to settle at $71.15 at the close of the market. The move, which consists of Icahn buying 5.54 million shares as well as call options for $168.9 million could leave Icahn with close to 10 percent of Netflix’s common stock. So why did Icahn buy into Netflix? The SEC filing adds some interesting color (emphasis added):
“The Reporting Persons acquired the Shares with the belief that the Shares were undervalued due to the Issuer’s dominant market position and international growth prospects. The Reporting Persons believe Netflix may hold significant strategic value for a variety of significantly larger companies that are engaging in more direct competition with one another due to the evolution of the internet, mobile, and traditional industry. The Reporting Persons are considering ways for the Issuer to maximize shareholder value but have reached no conclusion. The Reporting Persons may in the future seek to have discussions with the Issuer.”
There were rumors last week that Microsoft would be interested in buying Netflix. Eric Savitz over at Forbes is reporting that Microsoft has denied this, but also makes it clear that we shouldn’t kid ourselves: Icahn will want some bang for his bucks, and the fasted way to get there will be a sale.