David Einhorn's Greenlight Capital sues Apple, with eye on cash pile
Greenlight sued the maker of iPhones and iPads to block a shareholder vote that includes a management-backed proposal to make it impossible for the Apple board to issue preferred stock without shareholder approval.
Greenlight said in a letter to shareholders that it wants Apple to issue "perpetual preferred stock" to distribute a bounty from the USD 137 billion in cash the company is holding.
Apple responded yesterday by saying it has been "in active discussions about returning additional cash to shareholders," a statement that helped drive up its stock late in trade for a 3.0 percent gain.
"As part of our review, we will thoroughly evaluate Greenlight Capital's current proposal to issue some form of preferred stock," Apple said.
"We welcome Greenlight's views and the views of all our shareholders."
Greenlight's suit alleged that Apple violated US securities policies by "bundling" the proposal on preferred stock with two other shareholder-friendly measures.
Doing so forces shareholders to accept or reject all three measures together, rather than separately, which Greenlight says violates a Securities and Exchange Commission rule.
Einhorn, a prominent activist shareholder, wrote in a letter to Apple shareholders that his company "is dissatisfied with Apple's capital allocation strategy."
"The combination of Apple's low (and shrinking) price-to-earnings multiple and USD 137 billion (and growing) hoard of cash on the balance sheet supports Greenlight's contention
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