It figured Carl Icahn would pick the week of a hurricane and then a nor'easter to purchase 10% of Netflix, because it's caused a storm at Netflix HQ.
First the news breaks that Carl Icahn has purchased 9.98% of Netflix, and the stock jumps. Home Media Magazine reported that a Netflix spokesperson issues a somewhat friendly statement, “We have many shareholders, now including Mr. Icahn, and we’re always open to their perspective on how to build on our success.” Very friendly, given how Icahn behaved once he had a stake in Blockbuster.
So Netflix adopted a poison pill provision earlier this week:
The Rights Plan is intended to protect Netflix and its stockholders from efforts to obtain control of Netflix that the Board of Directors determines are not in the best interests of Netflix and its stockholders, and to enable all stockholders to realize the long-term value of their investment in Netflix. The Rights Plan is not intended to interfere with any merger, tender or exchange offer or other business combination approved by the Board of Directors.
Pursuant to the Plan, Netflix is issuing one Right for each current share of common stock outstanding at the close of business on November 2, 2012. Initially, these rights will not be exercisable and will trade with the shares of Netflix’s common stock. If the Rights become exercisable, each Right will entitle stockholders to buy one one-thousandth of a share of a new series of participating preferred stock at an exercise price of $350 per Right.
Greg Sandoval at CNet interviewed former Blockbuster CEO John Antioco about working with Icahn, and he had this advice for Hastings:
If Reed Hastings were on the call with us now, what advice would you give him about dealing with Carl Icahn?
Antioco: Do the best you can of not letting him get to you. Keep your wits about you and keep your sense of humor because Carl has one too. I think Reed is a smart guy who is not prone to emotional swings. If he can keep his head about him and deal with Carl in a strategic manner and not let Carl's style control him, he'll be okay.
On Thursday evening Icahn said he was considering a hostile takeover, among other options:
Asked by TV network CNBC whether he would "go hostile" on Netflix, Icahn said: "The thought had certainly entered my mind. I have to admit I think about it, but we haven't made that decision."
While Icahn said a hostile takeover was "certainly an alternative," he downplayed the possibility several times. He added that he would not be able to pay as much for Netflix as a "synergistic buyer" looking to acquire an Internet movie and TV subscription service.
It'll be interesting to see how much Carl Icahn interferes with or helps Netflix, or if his interest in the company helps spur a purchase (and a quick return on his money). No matter what happens, things just got a lot more interesting at Netflix.
Thanks to Mike, Seth, Fabian, Matthew, Tom, and everyone else that wrote in about this story.