Carl Icahn cashes out stake in Occidental 2 years after activist battle

Carl Icahn has sold off his stake in Occidental Petroleum as the activist fund manager capitalises on strong energy prices to exit what began as a combative investment against the oil company and its $55bn acquisition of Anadarko Petroleum in 2019.

Icahn began selling in late February and early March as Russian president Vladimir Putin sent troops into Ukraine in a war that has driven up oil prices. The bulk of the sales were at prices between $41 and $49 a share, according to securities filings, enabling Icahn to earn $1bn in profit.

Occidental shares opened trading on Monday at almost $58 as crude oil continued to rise, buoyed by reports that the US and Europe will consider blocking oil and gas purchases from Russia. Occidental’s share price has gained almost 50 per cent since late February.

Icahn built the bulk of his 10 per cent stake in Occidental when oil prices plunged with the outbreak of the coronavirus pandemic in March 2020. He had criticised the company’s chief executive Vicki Hollub for striking an acquisition he called “one of the worst disasters in financial history”.

After launching an activist campaign against Occidental, Icahn was given two board seats at the Houston-based driller. Soon thereafter, in June 2020, Occidental issued stock warrants to its shareholders, securities now worth more than $4bn as its shares soar.

As part of Icahn’s exit from Occidental, his two handpicked representatives, Andrew Langham and Gary Hu, would step off of its board of directors, the company said.

Occidental’s shares were trading at about $60 when the company beat larger rival Chevron in a heated takeover battle for Anadarko, but they dropped on concerns about debt the company took on to help fund the deal.

Icahn’s decision to sell comes as Warren Buffett, who supported Occidental’s chief during the Anadarko takeover battle with a $10bn financing package, has been buying shares in the company.

Buffett’s Berkshire Hathaway agreed to invest the $10bn in preferred shares that would pay an 8 per cent dividend and was given a warrant to buy up to 80mn shares of common stock, about 11 per cent of Occidental’s equity.