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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