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Carl’s marks

22 August 2012 By Jeffrey Goldfarb

Carl Icahn is getting a dose of his own tart medicine. The longtime uppity investor withdrew an offer to buy the remaining 18 percent of $2.6 billion oil refiner CVR Energy after multiple failed attempts to secure full control. That leaves Icahn the majority holder of a public company he can’t take private and couldn’t sell. Now he has to deal with a group that’s in some ways a bit like him: a stubborn minority.

It isn’t uncommon for the 76-year-old billionaire to abandon acquisition efforts. CVR, in fact, was his first successful takeover after more than a dozen whiffs. In this case, however, despite securing control he’s still walking away for the time being somewhat less than triumphant. Icahn needed 90 percent of CVR’s shares to squeeze out remaining investors and dispense with the annoying and costly requirements of keeping the company listed.

He doesn’t really seem to want to be an oilman anyway, instead reckoning CVR would be worth more to someone else. He touted the likes of Valero Energy and Tesoro as possible buyers and hired investment bank Jefferies to shop Texas-based CVR for a couple months. Despite reaching out to more than 30 potential suitors, there were no credible offers.

The dud auction may have had something to do with Icahn’s demands. He wanted at least $35 a share in cash after he won control of CVR with a tender offer at $30. The episode suggests Icahn may be getting too clever for his own good. The CVR bid, like previous efforts to buy Clorox and Lions Gate, was crammed with complex provisions and conditions – in this case contingent value rights for shareholders through next August.

Accustomed to being in the agitator role, Icahn now gets to see what it’s like on the receiving end. A couple of CVR holdouts already sued him in June, alleging “abuse” because Icahn was buying shares on the open market to get to 90 percent for less than the price he had promised. They asked a court to force CVR’s board to implement a poison pill to prevent Icahn from buying more shares. The case, and the minority shareholders, may be little more than a fatuous nuisance. If anyone would know, it’d be Icahn.


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