The investing section activities are a combination of old in private owned involvements of Mr. Icahn and other investing financess. The old in private involvements includes Icahn Onshore LP ( Onshore GP ) and Icahn Offshore LP ( Offshore GP ) . The Offshore LP and the Onshore LP together act as General Partners of Icahn Partners LP and the Offshore Master Funds.
The activities of the General Partner is to give investing advice, administrative and back office services to the Investment Fund. The activities and involvements of the Investment Fund are non offered to other entities or other investors. The General Partners investing scheme is still led by Mr. Icahn.
What a typical feature is of the Investment Fund, is that they frequently use an militant scheme. This scheme means that the Investment Fund frequently takes important involvement in the companies that they get, so they are able to act upon and command the acquired house.
Icahn acquired in 2011 extra portions of the Federal-Mogul Corporation. After the purchase of the extra portions, Icahn owns about 77.2 % ( Annual Report Icahn, 2011 ) of the common stock of Federal-Mogul.
Federal-Mogul is a planetary participant with more than 169 fabrication, distribution and proficient installations. These operations are entirely or partly owned through subordinates or joint ventures.
The activities of Federal-Mogul can be divided into two concern sections. These sections are defined as Powertrain and Vehicle Component Systems. The Powertrain section chiefly focal point is the original powertrain equipment merchandises the automotive, heavy responsibility and industrial applications. The other section sells and distributes Vehicle Component Systems. Vehicle Component Systems is a wide portfolio of merchandises for the planetary visible radiation vehicle aftermarket. In add-on this section services original equipment makers with certain merchandises.
On merchandise degree the concerns of Federal-Mogul can be divided into four merchandise groups, including Powertrain Energy, Powertrain Sealing and Bearings, Vehicle Safety and Protection, and Global Aftermarket.
By the terminal of 2011 Icahn about owned 65.1 % ( Annual Report Icahn, 2011 ) of Tropicana Entertainment Inc. ( Tropicana ) . Tropicana owns and explores regional casino and amusement belongingss, located in the United States and Aruba. The operations facilitate about 380,600 square pess of bet oning country with 7,121 slot machines, 231 table games and 6,046 hotel suites.
As noted by Icahn in their one-year study of 2011, the competition in casino and amusement concern has intensified over the old ages. This intensified competition comes due the fact of economic lag, decreased disbursement in leisure activities and new market chances for development. The bing casinos invest to a great extent to spread out their existing installations, develop new 1s and get established installations in bing markets. The enlargement aspirations and aggressive selling schemes by Tropicana ‘s ‘ rivals have increased competition in several markets where the company is active. Tropicana expects this intense competition to go on coming old ages.
As of December 31, 2011, Icahn owns about 54.3 % ( Annual Report Icahn, 2011 ) of American Railcar Industries, Inc. ( ARI ) . ARI designs and industries railway cars and provides through as a set of merchandises and services its clients with incorporate solutions.
The activities of ARI can be divided into two concern sections. The sections are Manufacturing Operationss and Railcar Services. The chief activities of the fabrication operations are ; railway car fabrication, railway car leasing and railway car and industrial constituent fabrication.
The two chief railway cars that ARI industries are hopper railway cars and armored combat vehicle railway cars. ARI manufactures extra railway car types, but at that place chief focal point is one the two types mentioned above. Besides the production of complete railway cars, ARI manufactures assorted constituents for the railcar- and industrial markets.
The 2nd concern section consist assorted incorporate railway car services, including fix, care, confer withing, renovation, technology, and fleet direction services. ARI offers clients the option to rent its railway cars through several leasing options, including service rentals. The care of leased railway cars are besides provided by ARI railway car fix and renovation installations. Renting companies and shippers of armored combat vehicle and forte hopper railway cars are the primary clients group for ARI services.
Viskase Companies, Inc. ( Viskase ) is for 71.4 % ( Annual Report Icahn, 2011 ) owned by Icahn. The chief activities of Viskase are the production and gross revenues of cellulosic, hempen, and plastic shells for the processed meat and domestic fowl industry. In add-on Viskase offers services to assorted consumer merchandise companies related to their merchandises.
Viskase seven operations in France are responsible for the distributing of the merchandises, straight or through one of the 10 distributers, in Europe, Africa, the Middle East, and parts of Asia.
Icahn Metals section operations are done through their indirectly entirely owned subordinate PSC Metals, Inc. ( PSC Metals ) . PSC Metallic elements is one of the largest independent metal recycling companies in the U.S. PSC Metals chief activity is roll uping, treating and selling ferric and non-ferrous metals, and the processing and distribution of steel pipe and home base merchandises. PSC Metals processes the cod metals into functional signifiers, and supplies it to their clients.
The bit metal concern can be separated into ferric and non-ferrous metals.
PSC Metals ferric metal concern, collects the ferric metals through different beginnings including, bit paces, industrial industries who recycle the bit from their metal-forming procedures and steel Millss who look to PSC Metals to remarket secondary merchandise they would otherwise bit. The processed ferric bit metals are eventually delivered to the end-users, including steel bring forthing mini-mills and incorporate steel shapers and metalworkss, every bit good as agents who aggregate stuffs for other users.
The non-ferrous metals that are recycled by PSC Metallic elements are aluminum, Cu, brass, chromium steel steel, and other nickel-bearing metals. These metals are sold on a topographic point footing, either straight or through agents, to intercede or end-users, which include smelters, metalworkss and aluminium sheet, and ingot makers.
Icahns ‘ Real Estate section consists three chief operations, including rental existent estate, belongings development, and associated resort activities. The rental existent estate portion of the section consist the leasing of retail, office and industrial belongingss to corporate renters.
The belongings development and resort activities are chiefly managed by the subordinate Bayswater Development LLC. This subordinate focusses chiefly on the building and sale of single-family houses, multi-family places, tonss in subdivisions, and planned communities and natural land for residential development. Furthermore the company owns land in different provinces for future belongings development.
Icahn conducts its Home Manner operations through its indirect entirely owned subordinate, WestPoint International, LLC ( WPI ) , a maker and distributer of place manner consumer merchandises based in New York.
WPI concerns consists of fabrication, sourcing, selling, distributing, and selling place manner consumer merchandises. WPI industries and sellers bed and bath place manners and supplies these merchandises through retail merchants or institutional clients.
The company offers branded and private label merchandises. The ain branded line of merchandises consist ware bearing registered hallmarks including, WestPoint Home, Grand Patrician, Martex, Luxor, and Vellux. In add-on, WPI manufactures and sells merchandises on the footing of licencing understandings, so under other design and trade name names.
The chief clients of WPI are jobbers, catalog retail merchants, warehouses, forte stores and retail concatenation shops, both domestically and internationally.
Business suiting codifications ( categorization system NAICS or SIC )
Federal-Mogul corporation ( automotive section )
Tropicana ( bet oning section )
ARI ( Railcar section )
( 4882 )
( 4789 )
Viskase ( Food packaging )
PSC Metallic elements ( Metallic elements )
Rental existent estate, belongings development and the operation of resort belongingss ( Real Estate )
WestPoint International, LLC ( Home Fashion )
Gross saless of each concern
Relatedness between the concerns
Relatedness between the concerns, can be clarified more in footings of the relatedness between type of companies Icahn acquires, than relatedness between sections.
Icahn started their diversified militant scheme in the beginning of 2000, when the company expanded it concern beyond their traditional existent estate concern. Activist scheme means that Icahn becomes actively involved in the companies that they get. This can be done in different ways including, act uponing the direction of a company, geting commanding involvement to implement alterations that improves the concern, and after that operating and spread outing the concerns. Therefore the acquisitions involve much more than merely get a company and delay for the consequence.
The grounds of variegation by Icahn, was that this scheme mitigates the hazard, provides long-run fiscal stableness and maintain funded degrees that meet long-run program duties. The company believes that their core strengths include: capitalise on growing chances in their existing concern and to get undervalued assets, which can be in Icahns ‘ existing- or new concerns. In the instance of capitalize on growing chances in bing concerns, Icahn believes that they have developed a strong portfolio of concerns with experient direction squads. They may spread out their existing concerns if appropriate chances are identified, every bit good as use their established concerns as a platform for extra acquisitions in the same or related countries.
In the 2nd instance of geting undervalued assets, Icahn invests in concerns that they believe are undervalued and have possible for growing. Following to that Icahn seeks to put in chances that originating from market inefficiencies, economic or market tendencies that have non been identified and reflected in market value, or complex or particular state of affairss. These chances may originate from companies that have dissatisfactory fiscal consequences, liquidness or capital demands, lowered recognition evaluations, revised industry prognosiss or legal complications.
Therefore, the relatedness between the sections where Icahn is active, can be found in the type companies that they get and their engagement within these companies.
Firm ‘s corporate variegation scheme
This portion of the study assigns a label to the Icahn ‘s ‘ corporate scheme. The label a derived of two measurement theoretical account, including Rumelt ( 1982 ) and Varadarajan and Ramanujam ( 1987 ) .
Rumelt ( 1982 )
Rumelt ( 1982 ) defines four variegation scheme classs including, individual concern, dominant concern, related concern, and unrelated concern. This measurement theoretical account gives a clear overview, between companies that diversify significantly into related concern and companies that are undiversified. The different classifications within the theoretical account can be calculated through the Rs ( steadfast specialisation ratio ) , Rc ( Related-core ratio ) , Rr ( Related ratio ) and the Rv ( steadfast vertical ratio ) .
The steadfast specialisation ratio is the fraction of grosss of the largest individual concern relation to the entire grosss. The Related-core ratio is the fraction of its grosss attributable to its largest group of concerns which portion or pull on the same common nucleus accomplishment, strength, or resource. The related ratio is the fraction of a house ‘s grosss attributable to its largest group of someway related concerns. Finally, a house ‘s perpendicular ratio is the fraction of its grosss attributable to its largest group of merchandises, joint-products, and byproducts associated with the processing of a natural stuff through a set of phases.
( Rumelt, 1982 )
Grosss of each concern section in 2011:
Grosss in $
% of entire
( Annual Report Icahn Enterprises Inc, 2011 )
Rs = 0.58 Rc = 1 Rr = 0 Rv = 0
The Automotive section is by far the largest section, but non big plenty harmonizing to Rumelt ( 1982 ) to be a categorized as a individual concern. All the concerns use the same nucleus militant scheme strength, therefore the related-core ratio is determined as 1. There are no grosss attributable to the Automotive section of somehow related concerns, so hence the related ratio is 0. Finally the house ‘s perpendicular ratio is besides determined at 0, because this is non the instance. Based on the measurement theoretical account of Rumelt ( 1982 ) , the variegation scheme of Icahn can be determined as, Unrelated Business.
Varadarajan and Ramanujam ( 1987 )
A 2nd theoretical account to find the variegation is the planar variegation step of
Varadarajan and Ramanujam ( 1987 ) . This theoretical account uses SIC codifications alternatively of gross revenues or grosss to find the grade of variegation and the way of this variegation. The theoretical account makes a differentiation between average narrow spectrum variegation ( MNSD ) and broad-spectrum variegation ( BSD ) .
BSD can be defined as the figure of 2-digit SIC codifications of the sections where the company is at the same time active. MNSD is defined as the figure of 4-digit SIC codifications of the sections where the company is active divided by the BSD. When the BSD and MNSD are calculated, the company ‘s variegation scheme can be positioned in one of the four classs in the planar matrix.
The matrix determines four different classifications including, companies with really low variegation are in cell A, cell B contains related diversified houses, cell C contains unrelated diversified houses, and companies with really high variegation a placed in cell D.
Planar conceptualisation of diverseness in houses
Mentioning to the concern SIC codes the BSD and MNSD are calculated as followed:
SIC BSD = 7 SIC MNSD = ( 8/7 ) = 1.14
The findings of Cijsouw ( 2009 ) “ Corporate Diversification and Firm Performance ” are used to find whether the BSD and MNSD are high or low. As shown below the mean BSD in the U.S is about 9.5 and the mean MNSD 2. Mentioning to these findings, it can be concluded that the BSD of Icahn is high and the MNSD is low. Therefore the company ‘s variegation scheme can be classified in cell C ( unrelated diversified houses ) . Cell C letter writers with Rumelt ( 1982 ) class of Unrelated Business.
Average TD, BSD, NSD and MNSD level per state
Beginning: Cijsouw, ( 2009 )