Billionaire investor Carl Icahn announced a tender offer Feb. 16 through one or more of his affiliated companies for all of the outstanding shares of common stock, and related stock purchase rights, of CVR Energy Inc., Sugar Land, Texas. CVR owns two refineries and majority ownership in CVR Partners LP, which owns a nitrogen plant in Coffeyville, Kan.
Tendering shareholders will be paid $30 per share in cash, plus a contingent value right. The right will entitle holders to an additional payment, in cash, equal to the value that the company is sold for in excess of $30 per share.
Icahn also announced his intent to nominate a slate for all nine directorships on the CVR board of directors. They include Bob Alexander, SungHwan Cho, George Hebard III, Vincent Intriei, Samuel Merksamer, Stephen Mongillo, Daniel Ninivaggi, James Strock, and Glenn Zander.
As was reported in a Green Markets Alert Feb. 13, Icahn, who owns about 14.53 percent of CVR personally or via his affiliates, believes that CVR should be put up for sale. He told CVR Chairman, CEO, and President Jack Lipinski this on Feb. 13. According to Securities and Exchange Commission filings, Lipinski said he would take the suggestions under advisement and discuss them with his board.
CVR on Feb. 16 acknowledged that it had received the Feb. 16 notice from Icahn Partners LP of its intent to initiate an unsolicited tender offer to acquire all of the outstanding shares of CVR. The company said Icahn has not commenced a formal tender offer, nor has he indicated when he will do so. In addition, it noted that Icahn has also given the company notice that he intends to nominate nine directors – five of whom are employees of Icahn – to the company’s board at the next annual meeting, and to submit a shareholder proposal. CVR said its board will review all of Icahn’s actions and respond as appropriate in due course.
Icahn says if the current board puts CVR up for sale before the initial expiration date of the tender offer (expected to be on or about March 23), then Icahn reserves the right to withdraw the tender offer and proxy fight. However, if CVR is not put up for sale, he will proceed with the tender offer and proxy fight in an effort to elect a new board that will have a shareholder mandate to sell the company.
Closing of the tender offer will not be subject to any due diligence or financing conditions. The tender offer will be subject to there being validly tendered and not withdrawn at least 35.76 percent of the issued and outstanding CVR shares. That number of shares, when added to the shares already owned by Icahn and affiliates, represents a majority of the issued and outstanding shares. The tender offer will also be conditioned upon the election of the Icahn slate of directors, the elimination of CVR’s poison pill (which the Icahn directors intend to do upon their election), and other typical conditions. The tender offer will include withdrawal rights so that a tendering shareholder can freely withdraw any shares prior to the acceptance of such shares for payment under the tender offer.
In the event that a definitive agreement for the sale of CVR is executed within nine months following the closing of the tender offer, all tendering shareholders whose shares were purchased in the tender offer will receive an additional cash payment, through a non-transferable contingent value right, equal to the amount (whether in cash or securities) in excess of $30 per share for which the company is sold. Shareholders whose shares are purchased in the tender offer are thus guaranteed a minimum payment of $30 per share – plus upside potential.
"We are launching this tender offer and proxy fight to provide shareholders the opportunity to obtain the value that we believe can be obtained in a sale of the company,” said Icahn. “We are offering shareholders a minimum