Billionaire Investor Carl Icahn Starts Proxy Fight With McDonald’s
Carl Icahn, a billionaire financier and legendary name on Wall Street, has picked his latest activist battle with McDonald’s (NYSE: MCD), the multinational fast-food corporation. Icahn is feuding with the company for an unlikely reason; pigs, yes pigs.
Icahn has nominated two people to stand for election to McDonald’s board; Leslie Samuelrich, president of Green Century Capital Management, a Boston-based investment firm with over $1bn under management; and Maisie Ganzler, an executive at Bon Appétit Management Company, a California-based restaurateur. It’s the typical strategy of an activist investor nominating board members to push for their favored policies.
- Icahn is pressing McDonald’s over the treatment of pigs by its suppliers. He has called it “obscene” how the pigs used for McDonald’s products are treated, mainly using small crates to house the pregnant ones. In 2012, McDonald’s said it’ll stop sourcing pigs from such suppliers and says it expects between 85% to 90% of its US pork supply this year to come from pigs not housed in gestation crates.
- Icahn is demanding that McDonald’s enforce a mandate for all its suppliers to switch to “crate-free” pork and set definite timelines for doing so. In a defensive press statement, the fast-food giant said the immediate change Icahn is pressing is “impossible” with the current pork supply in the US. It, however, claimed to be on track to meet that mandate by 2024.
Icahn is battling McDonald’s unusually; he self-admittedly owns just 200 shares of the company worth around $50,000 at current prices, compared to its overall market capitalization of $187bn. Usually, activist investors taking on giant corporations first build up significant billion-dollar stakes.
It’s also noteworthy that Icahn is the majority owner of Viskase, a company that produces and supplies packaging for the pork and poultry industry. McDonald’s poked at Viskase for not having similar commitments to stop providing packaging to pork suppliers using gestation crates.
- It’s not clear how this battle will play out. What’s clear is that Icahn isn’t new to them. Since the 1980s, he has picked up fights with giant corporations, including tech companies like Yahoo, Dell, Netflix, and eBay. Many times he emerged victoriously, and many other times, he didn’t. Such is the game of investing.
- Icahn handles most of his investments through Icahn Enterprises, a conglomerate listed on the Nasdaq stock exchange (ticker: IEP). He also controls Icahn Partners, a billion-dollar hedge fund.
McDonald’s is America’s largest fast-food chain. It reported a record $7.5bn net income on $23bn in revenue in 2021.
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