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Carl Icahn drops Apple buyback proposal

After Apple's move to repurchase $14 billion in shares, the activist investor says it makes no sense to continue on with his buyback proposal.

Carl Icahn
Carl Icahn

Activist investor Carl Icahn appears to have had a change of heart about his plan for Apple to boost its stock buyback program.

In a letter to Apple shareholders on Monday, Icahn wrote that he has decided to ditch his "non-binding proposal, especially when the company is already so close to fulfilling our requested repurchase target."

Icahn for months has been urging Apple CEO Tim Cook to boost his company's plans for a stock buyback program. When companies buy back shares, they effectively reduce any watering-down of share value, giving large shareholders -- like Icahn -- even more value in a company. Icahn, who owns about $4.1 billion in Apple shares, was asking the company to commit to at least $50 billion of share repurchases in 2014.

Icahn in his letter noted a recommendation sent down recently by the Institutional Shareholder Services (ISS) -- an organization that guides shareholders on board votes and other measures they might be confronted with -- that urged shareholders to vote against the Icahn proposal. In his letter, Icahn said since Apple repurchased $14 billion in shares already, and is on pace to buy back a total of $32 billion this fiscal year, it's awfully close to the $50 billion he requested. It's also possible that Apple gets to $50 billion, though the company hasn't made any promises.

"As Tim Cook describes them, these recent actions taken by the company to repurchase shares have been both 'opportunistic' and 'aggressive' and we are supportive," Icahn wrote. "In light of these actions, and ISS's recommendation, we see no reason to persist with our non-binding proposal, especially when the company is already so close to fulfilling our requested repurchase target."

Icahn's decision to ditch his proposal will be good news for New York City Comptroller Scott Stringer, who runs five pension funds that own over $1 billion in Apple shares. Stringer told The New York Times on Sunday that he was against Icahn's proposal, saying it was "unnecessary, risky, and shortsighted."

Icahn's decision to remove his proposal from Apple's February 28 shareholder meeting was accompanied by glowing remarks for the company and Cook. Icahn, who has charged Apple with being "almost irrational" at the height of his debate over stock buybacks, said in his letter to shareholders on Monday that he and his partners "are extremely excited about Apple's future."

This story has been updated throughout the morning.