UPDATE: Icahn To Drop Commercial Metals Fight If Tender Fails
27 Dicembre 2011 - 7:48PM
Dow Jones News
Billionaire investor Carl Icahn said he plans to abandon his
minority stake in scrap-metal processor Commercial Metals Co. (CMC)
if his tender offer to acquire the company is unsuccessful.
Through a tender offer launched earlier this month, Icahn took
his $1.73 billion bid to acquire Commercial Metals directly to the
company's shareholders. Yet in a note to holders Tuesday, Icahn
said his firm will drop its proxy fight if he is unable to garner
the 40.1% of shares needed for majority control. The offer from
Icahn, who already holds a roughly 10% stake in the company,
expires Jan. 10.
"We believe that it will not be possible to work with this board
to improve the company from the position of a 10% stockholder, even
if we were to be successful in electing our three nominees," Icahn
said.
A representative for Commercial Metals declined to comment
Tuesday.
The company's board last week urged shareholders to reject the
bid, saying it believes the "opportunistic" offer substantially
undervalues the company. At $15 a share, the bid is worth less than
half the company's all-time trading high of $39.80 reached in June
2008. Still, shares, which were recently down 1.5% at $13.95, have
surged roughly 24% since Icahn unveiled his plans late last
month.
Icahn has been sharply critical of the company's board and
management in recent months for what he has called a "below
average" operating performance fueled by missteps in international
growth plans and a poor investment record. The company has defended
its actions, pointing to such efforts as the realignment of its
Americas operations.
Citing discussions with shareholders, CRT Capital analyst Kuni
Chen said he believes Icahn has the potential to win over
shareholders in his bid for Commercial Metals, noting the current
market environment.
Meanwhile, D.A. Davidson & Co. analyst Brent Thielman said
he believes the bid "certainly undervalues" the company, yet
acknowledged that investors weary of the stock's recent declines
could yield to Icahn's offer.
"This is a construction-focused supplier, and construction is at
a pretty severe bottom," Thielman said.
Icahn, in calling on shareholders to tender shares, reiterated
Tuesday that he aims to either acquire the company or see it sold,
while again stressing that the company fits well with his firm's
existing metals businesses.
"It is clear to me that in order to get this board, a board that
I believe is firmly entrenched in the status quo, to move forward
with a sale process, it will take the pressure of a shareholder
mandate in the form of a large response to our tender offer," he
wrote.
While widely known for targeting companies he views as
undervalued and then aggressively seeking changes, Icahn has a
mixed track record among his recent battles.
In September, Icahn withdrew from efforts to force a sale of
household-products maker Clorox Co. (CLX) after he failed to garner
support from a significant chunk of shareholders. And in August,
Icahn agreed to shed his stake in Lions Gate Entertainment Corp.
(LGF), the final chapter in a nearly two-year battle for control of
the movie studio.
Meanwhile, Icahn saw his years-long calls for Motorola Inc. to
split into two vindicated when the company earlier this year
separated into Motorola Solutions Inc. (MSI) and Motorola Mobility
Holdings Inc. (MMI), whose recent plans to sell itself to Google
Inc. (GOOG) likely resulted in a significant payday for the
activist investor.
-By Mia Lamar, Dow Jones Newswires; 212-416-3207;
mia.lamar@dowjones.com
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