Billionaire investor Carl Icahn on May 7 announced that, as of 11:59 p.m., New York City time, on May 4, 2012, 48,112,317 shares of common stock of CVR Energy Inc. were validly tendered pursuant to the offer by his affiliates to acquire CVR for $30 per share plus a contingent value right (up to $7 per share). As all of the terms and conditions of the offer have been satisfied, Icahn’s affiliates have accepted for payment all of the tendered shares, which represent approximately 63 percent of all CVR shares held by shareholders unaffiliated with Icahn. Upon the purchase of these shares, to be concluded May 7, the Icahn group will own approximately 69 percent of CVR’s outstanding shares.
The deal values the company at $2.6 billion.
Icahn also announced May 7 that the subsequent offering period for the offer has commenced and will expire at 11:59 p.m., New York City time, on May 18, 2012. During the subsequent offering period, holders of CVR common stock who did not tender their shares during the initial offer period may tender their shares and receive the same consideration of $30 per share plus a contingent value right that was offered during the initial offer period. If Icahn achieves 90 percent or more of the shares after this round, he must cause a merger to take place in which all remaining outstanding shares will be converted into the right to receive the same consideration as in the tender offer ($30 per share in cash plus a contingency cash payment, or CCP), unless such holder chooses to exercise statutory appraisal rights.
If Icahn does not hold 90 percent or more of the outstanding shares at the conclusion of the subsequent offering period, those shares which have not been tendered will remain outstanding.
In accordance with the terms of the previously announced agreement between Icahn and CVR, upon the purchase of the tendered shares on May 7, seven members of CVR’s nine-member board of directors will be replaced automatically with seven individuals nominated by Icahn.
After consummation of the offer, Icahn says he will cause CVR to engage one or more independent, nationally recognized investment banking firms to conduct a 60-day sales process to encourage acquisition proposals from third parties. He said he would support any bona fide, all-cash offer received within this 60-day marketing period that results in all stockholders receiving a net amount of at least $35 per share. He said he may vote for lower bids, but will not be obligated to do so.
The CCP comes into effect if the company is sold for more than $30 per share. Stockholders can get up to another $7 per share.
In addition to two refineries – Coffeyville, Kan., and the recently acquired one at Wynnewood, Okla. – CVR owns 70 percent of nitrogen producer CVR Partners LP, which has a petroleum coke-based facility in Coffeyville, Kan. Current anhydrous ammonia capacity is 430,000 st/y, and UAN at 720,000 st/y. UAN capacity is being expanded to over 1 million st/y, with the completion expected in early 2013.
The Coffeyville refinery and nitrogen plants have been sold for considerable profit by subsequent owners. In 2010 (GM June 28, 2010), majority owners Kelso Investment Associates VII LP and Goldman Sachs Group Inc. put their majority stake up for sale of CVR Energy Inc. They had acquired it five years earlier for an estimated $700 million to $1 billion, with actual terms not disclosed (GM July 18, 2005, Oct. 2, 2006). Pegasus Partners II LP, which sold the company to Kelso and Goldman, had bought it from the bankrupt Farmland (GM March 8, 2004, June 27, 2005).
There were multiple views as to what Pegasus actually paid and Farmland received; however, initial court documents indicated $281 million, though later documents suggested less. Farmland’s bankruptcy trustee was to complain later that the company may have netted only $11 million in receipt