Billionaire activist investor Carl Icahn is seeking at least two seats on FirstEnergy Corp.'s board of directors but is not interested in company control, Bloomberg News reported March 8, citing people familiar with the matter.
FirstEnergy on Feb. 18 disclosed that Icahn signaled his intent to acquire "voting securities" of the company worth between $184 million and $920 million.
In a letter dated Feb. 16 from Icahn Capital LP, FirstEnergy was informed that Icahn "has a present good faith intention to acquire voting securities of [FirstEnergy] in an amount exceeding $184 million but less than $919.9 million of the voting securities of the issuer, depending upon various factors including market conditions," the company disclosed in a Form 10-K filing.
"The letter represents our only contact with Icahn Capital and we don't have any additional information to share," FirstEnergy Senior Vice President and CFO Jon Taylor said on a Feb. 18 earnings call.
FirstEnergy stock was up more than 10% in heavy trading on Feb. 18 before closing at $34.25.
Icahn is reportedly focused on helping FirstEnergy navigate a federal corruption case and other issues in order to "narrow the valuation gap between FirstEnergy and its peers," sources told Bloomberg News.
The sources, who asked not to be identified, noted that Icahn is hesitant to seek control of the board because of regulation obstacles related to changes of control, according to Bloomberg. It is also possible that talks will fall apart.
An FBI affidavit filed in July 2020 linked FirstEnergy and affiliated entities to millions of dollars wired through a 501(c)(4) nonprofit group to support Ohio's nuclear subsidy legislation and the enterprise of former Ohio House Speaker Larry Householder while defeating a ballot initiative to overturn the law.
In October 2020, FirstEnergy fired former CEO Charles Jones Jr. and other senior company executives as part of an internal review of the company's ties to the federal racketeering conspiracy case. FirstEnergy has hired a new chief legal officer and on Feb. 18 announced the appointment of John Somerhalder as vice chairman of the board of directors.
On March 8, FirstEnergy named Steven Strah as company CEO and board director, effective immediately. Strah had been serving as acting CEO since October 2020.
The Federal Energy Regulatory Commission and Ohio regulators have opened investigations into FirstEnergy's lobbying and political activities.
FirstEnergy referred inquiries on Icahn's intentions and stake in the company to an outside public relations firm. The firm declined to comment.
