Motorola Solutions Inc. (MSI), which split in two a year ago following pressure from Carl Icahn, bought $1.17 billion of its stock from the billionaire investor and said his representative on the board is stepping down.
The repurchase, representing about 7 percent of shares outstanding, is part of a $3 billion buyback program, Schaumburg, Illinois-based Motorola Solutions said today in a statement. Vincent J. Intrieri, a director of Icahn Enterprises G.P. Inc., has agreed to resign from the board.
Icahn pushed Motorola to spin off its mobile-phone unit after four years of agitating for change. Motorola Solutions had gained 24 percent since the Jan. 4, 2011 separation before today, outperforming the 7.5 percent gain in the Standard & Poor’s 500 Index. The spun-off business, Motorola Mobility Holdings Inc., is being bought by Google Inc. for $12.5 billion.
The accelerated repurchasing by Motorola Solutions “represents a huge vote of confidence by management,” Peter Misek, an analyst at Jefferies & Co. who recommends buying the shares, said in a note to investors.
Motorola Solutions purchased 23.7 million of its common stock at $49.15 a share from Icahn and some of his affiliates. As of Jan. 1, Icahn Associates Corp. owned 38.3 million shares of Motorola Solutions, the largest stockholder in the company, according to data compiled by Bloomberg. With 14.6 million shares left, Icahn’s stake was cut to about 4.6 percent, according to the data.
Shares (MSI) of the maker of radio equipment for emergency workers and scanning devices for retailers rose 1.5 percent to $50.15 at the close in New York.
Misek said today’s transaction, coupled with potential federal grant money from the payroll tax extension legislation, may increase his 2013 earnings estimate to $3.99 a share from $3.69.
Icahn built his reputation as a corporate raider in the 1980s targeting companies such as Phillips Petroleum Co., Texaco Inc. and Trans World Airlines Inc. He recently sparred with management at Time Warner Inc. and Clorox Co. He often spends years holding stocks as he waits for investments to pay off.
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