Carl C. Icahn won’t be deterred by WebMD‘s woes.
The activist investor disclosed on Wednesday that he had raised his stake in the online health company to 11.64 percent from 9.99 percent. Intriguingly, Mr. Icahn began adding to his stake in WebMD on Jan. 10, the day the company announced that it had ceased efforts to sell itself.
In his filing with the Securities and Exchange Commission, Mr. Icahn recommended that WebMD use its cash hoard to buy back up to $1 billion of its own shares through a Dutch auction, with $30 as the high point. That would be 14 percent higher to its closing price on Wednesday, a level that the investor said “reflects the news of the Issuer’s most recent significant financial guidance disappointment and the termination of its sale process.”
It’s an effort by Mr. Icahn to prod the company into taking some action to bolster its stock price. He and other prominent investors, like George Soros, piled into WebMD’s stock last year, hoping that the company would sell itself. And until WebMD formally took itself off the auction block earlier this month, rumors had been circulating that the company may have been part of a complicated sale to Yahoo.
But the squelching of that speculation by WebMD — coupled with a warning by the company that it expects to post lower revenue and profit this year because of reduced ad spending by drug makers — has hurt those arbitragers.
Shares in WebMD rose 2.3 percent in after-hours trading, to $26.90. They have fallen nearly 32 percent since the company announced that it planned to remain independent.