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Institutional Shareholder Services, the influential shareholder advisory firm, sees little chance of a settlement between Time Warner and Carl Icahn, the billionaire financier who is seeking radical restructuring at the media conglomerate.

Patrick McGurn, special counsel at ISS, said he was “95 per cent certain” that Time Warner and Mr Icahn would engage in a full-scale proxy fight for control of the 14-strong board, culminating in a shareholder vote at Time Warner’s annual meeting in May. “There is not enough common ground between them,” Mr McGurn said. “Right now it seems this will go to a vote.”

ISS’s recommendations in proxy fights are often followed up by significant numbers of institutional investors, and the firm will therefore play an important role in the Time Warner debacle. It said it was unusual for proxy fights to have so little common ground. Mr Icahn, who has been taking stakes in companies with a view to shaking up management since the 1980s, has accumulated a stake of about 3 per cent in Time Warner with three other hedge funds.

He has enlisted the support of Lazard, the investment bank, which is coming up with an analysis of Time Warner. This is expected to recommend that the group is split up.

Mr Icahn has stepped up his criticism of Dick Parsons, Time Warner’s chairman and chief executive, and called for him to step down.

Steve Case, the founder of internet group AOL who was one of the main architects of the merger between Time Warner and AOL at the height of the internet bubble six years ago, wrote in the Washington Post that he had proposed that Time Warner be split into four in order to “liberate” the divisions.

On Sunday, it emerged that in July Time Warner’s board had considered a plan to break up Time Warner but rejected it.

He made the proposal after having concluded that “integration would never happen”.

Mr Case resigned from the Time Warner board in October but remains a shareholder, owning $250m worth of shares.

He wrote that he had not had contact with Mr Icahn, although his views appear to support those of the dissident shareholders.

ISS will play a pivotal role in Mr Icahn’s chances of success. Time Warner’s $85bn market capitalisation means Mr Icahn needs the backing of half the remaining shareholders, none of which has publicly backed him.

Copyright The Financial Times Limited 2019. All rights reserved.

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