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Icahn Backs $2.6B Offer for CVR

Mon, 03/12/2012 - 7:30am

NEW YORK (AP) — Billionaire investor Carl Icahn on Friday insisted that his $2.6 billion offer for CVR Energy Inc. is in the best interest of the oil refiner's shareholders and lashed out at its management for rejecting it.

The news sent CVR shares up $1.85, or 7.1 percent, to $27.87 in afternoon trading.

Last week, Sugar Land, Texas-based CVR said that Icahn's offer undervalues the company, doesn't protect investors from future debt and contains too many provisions that would allow Icahn to back out of the deal.

When Icahn originally made the $30-per-share offer in February, it represented an 8.7 percent premium over the company's stock price. The premium has since risen to about 15 percent.

The offer also includes a "contingent value right," that would entitle holders to an additional cash payment if the company is eventually sold for more than $30 per share.

In his Friday letter to shareholders, Icahn called the company's claims "disingenuous and misleading."

"I think my offer is a win-win for shareholders and I stand ready and willing to consummate the offer on its terms," Icahn wrote.

CVR issued a statement late in the day saying that Icahn's letter doesn't change its view that his offer undervalues the company. It also noted that Icahn hasn't done anything to address CVR's concerns about with the offer, and urged its shareholders to reject it.

"His offer is simply his vehicle to put his employees and friends on the board of CVR Energy at an inadequate price," the statement read.

Icahn said that while the potential buyers his company has spoken with aren't ready to buy CVR yet, he still plans to put the company up for sale if he is able to take control of it.

For that to happen, Icahn needs 36 percent of the company's outstanding shares to be tendered in the offer, which would give him a 51 percent stake.

As part of his offer, Icahn said he would replace the nine directors on the company's board. New directors would be expected to eliminate CVR's "poison pill" measure that would thwart attempts to prevent a sale of the company. Icahn's tender offer is contingent on those replacement directors being seated.

Icahn is known for buying and shaking up struggling companies, with mixed success.

Icahn said that if he doesn't get the 36 percent he needs by his March 23 deadline, he will drop the proxy fight and move on.

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