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Breaking News from CNBC's David Faber: Carl Icahn is the Activist Hertz was Reacting to with Poison Pill - Sources

Friday, 3 Jan 2014 | 12:17 PM ET

WHEN: Today, Friday, January 3rd

WHERE: CNBC's "Squawk on the Street"

Following is the unofficial transcript of breaking news from CNBC's David Faber. Following is a link to the video from CNBC.com: http://video.cnbc.com/gallery/?play=1&video=3000232988.

All references must be sourced to CNBC.

David Faber: You may recall earlier this week on Tuesday, shares of Hertz were up sharply after the company installed a poison pill that activates at 10% if any one buyer should reach that threshold or 15% for a group. At the time as I reported of course I had said that the Hertz was aware of an activist in its shares, however at that point I was not able to pinpoint the specific activist in question. There was some speculation. CNBC reporting some other names as well as of investors who do dabble in activism or focus on it who might have owned the shares. But at this point I can now tell you that the activist in question that Hertz has been reacting to according to people close to the situation is non other than that man right there, Carl Icahn. My trading sources tell me he has amassed what may be as much as a 30 to 40 million share position in Hertz, now that is on swap. And I want to make this clear to people, which would mean he doesn't need to necessarily to file when he pasts 5%. He does this often, in fact you may recall when I first reported his ownership in Dell some time back, it was also done initally on swap. Back in change, but it is a derivative transaction that allows him to buy without having that economic consequence of his ownership without actually having to file that ownership. But Hertz, sources familiar with the situation tell me, is aware of Mr. Icahn's ownership. What is not completely clear at this point is his reaction to the enormous move up in the stock when the company put the poison pill in and whether in fact that has motivated him in some way to perhaps reduce his position or not move forward with might be an activist campaign. What would be the key to that campaign, well as I've reported on Tuesday, it would be focused on getting the company to spinoff and separate out its equipment leasing business. That is a capital intensive business that a number of Hertz investors believe would be better off shorn from the company, would create value in so doing, and then would also allow the company to lever up its balance sheet to buyback a significant amount of stock, not just with the proceeds of any split of the equipment leasing, but also because it would be able to leverage its balance sheet more given the exit from that capital intensive business. So, we will see what occurs from here, but wanted try to at least get a little more meat on the bone so to speak on a story we watched this week. As we watch that stock, up sharply on Tuesday, and again today. Again, Mr. Icahn is the activist in question that Hertz was reacting to. I have called Mr. Icahn. He has not returned calls at this point. Unclear whether he would comment regardless on his ownership stake there and his continued ownership. 30 to 40 million shares again is what I am hearing from a number of different trading sources, it is likely to be the overall size, but importantly, that is not all common shares? owned by him, hence the lack of a filing of 13d.

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