Icahn Nears First 2012 Win With CVR Energy Bid
Updated to reflect CVR Energy comments and additional analyst estimates
NEW YORK ( TheStreet) - Carl Icahn is moving closer to winning a $30 a share bid for refiner CVR Energy (CVI) after he announced that 55% of outstanding shareholders have tendered their shares to his hostile campaign.
For Icahn, a successful bid for CVR Energy -- worth roughly $2.26 billion -- would be his first successful activist campaign in some time. His luck turned for the worse in recent bids, first with a failed play for cleaning products giant Clorox(CLX) in late 2011, and then with a bid for Commercial Metals (CMC) . Still, winning CVR Energy won't make up for lost profits after Icahn sold a 30% stake in Lionsgate Films (LFG) before a 60% The Hunger Games -driven share rally.
In his February bid for CVR Energy, Carl Icahn dusted off the M&A playbook he used when making a disastrous $12.6 billion bid for Clorox(CLX) in 2011.
After taking a 14.5% stake in CVR Energy, Icahn is looking to use a larger controlling stake of the refining and nitrogen fertilizer company to drum up bidding interest from a competitor. That would mirror Icahn's unsuccessful tender offer for the cleaning products giant, which ended last September without shareholder support or competing bids.
After failing with Clorox and Commercial Metals in January, the preliminary results of Icahn's tender signal that he may be successful in buying the Sugarland, TX.-based company.
"In light of the clear message that shareholders have now sent to the board, it would be a shame if the board took any action to thwart or delay our offer," Icahn said in a Tuesday statement. As part of the statement, Icahn said that he has extended his tender offer until April 30.
While Icahn declared victory on Tuesday, high hurdles still remain for the hostile campaign.
In response to initial tender results, CVR Energy stressed that the offer is non-binding and that Icahn hasn't yet bought shares to add to his 14.5% stake as a result of a "poison pill" the company enacted. "The real choice for stockholders will be at our annual meeting where they will decide whether to elect Mr. Icahn's hand-picked nominees in place of our qualified and experienced Board of Directors," said CVR Energy in a statement.
Analysts at DealAnalytics give CVR Energy an expected value of $27 a share on a 60% probability that Icahn's tender won't culminate in a deal.
CVR Energy shares rose over 6% in Tuesday trading to $28.95, slightly below Icahn's offer price, signaling that investors have increasing confidence in the takeover bid. Year-to-date, CVR Energy shares are up nearly 50% on Icahn's bid and M&A speculation.