A new column on Icahn buying RAD:
May 17, 2005 (The Patriot-News - Knight Ridder/Tribune Business News via COMTEX) -- An investment group managed by billionaire investor Carl Icahn has taken a financial interest in Rite Aid Corp.
Icahn's stake in the East Pennsboro Twp.-based drugstore chain comes on the heels of his victorious proxy fight to gain a seat on the Blockbuster Inc. board of directors and his ability to thwart an acquisition by Mylan Laboratories Inc. of Canonsburg.
Rite Aid is one of a dozen companies listed as investments by Icahn Management LP, a hedge fund, in a document filed with the Securities and Exchange Commission on Friday.
According to the document, Icahn Management owned 10 million shares of Rite Aid as of March 31, or about 1.9 percent of the company. Carl Icahn is one of the investors in the hedge fund. It is not known whether Icahn Management has increased or decreased its Rite Aid investment since March 31.
Rite Aid spokeswoman Karen Rugen said the company does not comment on its stock price and "we don't comment on people who invest in the stock." She noted that "people invest in our company all the time."
Evan Mann of Gimme Credit, a New York firm that does corporate bond research for institutional investors, said Icahn's Rite Aid investment "certainly peaked my interest." Mann noted that Icahn "tends to be a more proactive investor."
The question is whether Icahn "has something up his sleeve or does he just think the stock is cheap," Mann said.
Rite Aid stock closed Monday at $3.94 a share, down 3 cents. It is up about 7 1/2 percent for the year.
Icahn became known as a corporate raider in the 1980s through his hostile takeover of TWA. Lately, he has taken an active investment role in companies such as Blockbuster Inc. and Mylan Laboratories, a generic drug manufacturer.
Last week, Icahn and two associates were elected to the Blockbuster board as dissident directors. He owns about 9 percent of Blockbuster.
Earlier in the year, Icahn prevailed over Mylan, which called off its planned acquisition of King Pharmaceuticals for $4 billion.
At both Blockbuster and Mylan, Icahn has questioned the compensation packages for the CEOs.
Rite Aid reported sales of $16.8 billion for the fiscal year that ended Feb. 26. It posted earnings of $302.5 million, up 262 percent from the year before. However, sales have been sluggish of late and are lagging behind its two main competitors, Walgreen Co. and CVS Corp.
Mann has expressed concern that an "underinvestment" in Rite Aid's store base is "rapidly eroding its competitive position."
Rite Aid has initiated a store-development program in the past 18 months. It expects to open 80 new and relocated stores in the current fiscal year and remodel 200 other stores.
Walgreen, meanwhile, is essentially opening a new store every day, while CVS significantly expanded its business last summer with its acquisition of 1,250 Eckerd drugstores in the South. |
