Could Netflix (NFLX) Soon Have a New Owner?

By Nov 18, 2012, 8:07 AM Author's Blog  

Netflix (NFLX) CEO Reed Hastings, who has been largely silent since it was learned billionaire Carl Icahn bought a 10% stake that amounts to 5.5 million shares in the Los Gatos, Calif.-based company, rejected the idea of allowing Netflix to be acquired by a wealthier firm.

“We think we can make it in the long term absolutely on our own. We’ve been doing that for 10 years,” Hastings told the Journal on Friday.

Mr. Icahn though, who is known for pressing for buyouts and management changes to bolster shareholder value at companies he buys into, has suggested that allowing Netflix to be acquired by a larger company would be best for shareholders.

“There’s a basic philosophical difference here,” Mr. Icahn told the Journal. “I believe the shareholders, the rightful owners of the company, should decide whether a company should be sold, not the management.”

Netflix adopted a so-called poison pill this month against Mr. Icahn which basically prevents him from an hostile takeover of the company by building up a larger stake, or installing his own board members to help with strategy. In a regulatory filing, Icahn called the move without a shareholder vote “an example of poor corporate governance.”

“Will he run a proxy? Probably,” said Hastings. “Almost always he runs a proxy battle.”

Hastings also said that while Netflix is in a “middle stage” and vulnerable to takeover talk because it doesn’t have a $100 billion market cap, it can make it on its own and doesn’t need an owner with deeper pockets.

Icahn disclosed in a SEC regulatory filing on Oct. 31 that he acquired just under a 10% stake (about twice the position Hastings has) in the subscription video company for an average of about $60 a share. Following the announcement NFLX spiked up to 22% before closing Nasdaq’s regular trading up nearly $10.00, or 14%, to $79.24, giving the co. a market cap of $4.4 billion. On Friday, Netflix shares fell 58 cents, or $0.70%, to $80.90.

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