Icahn issues letter to CVR shareholders
Billionaire investor Carl Icahn issued an open letter to CVR Energy Inc. shareholders today, addressing some negative press about himself, as well as promising to walk away from the deal on March 23, if less than 36 percent of the outstanding shares are tendered by that date. “…we will respect the views of shareholders and move on to pursue other opportunities,” he said.
The text of the letter follows:
Dear CVR Shareholders,
On March 12, a major news organization published commentary about my record and intentions at your company which prompt me to respond directly to you. The piece was so fraught with inflammatory rhetoric and reasons not to tender your stock that I would not be surprised if it was written by a PR firm paid for by CVR. I am amazed that a reputable media organization would publish it.
The article implied that I "burned" other shareholders to achieve a 35 percent return in 2011, a charge that is outrageous and ill-informed. Let me set the record straight. The returns I achieved in 2011 were by working assiduously to increase the value of stocks like Biogen, Chesapeake Energy, Motorola, Take-Two, Regeneron, among others, which led to gains of billions of dollars for ALL shareholders, not just my firm.
It is a common charge that corporate activists like myself are only out to line our own pockets, a charge invariably leveled by PR firms hired by companies we target. The truth is, we almost invariably target companies where managements have repeatedly failed to deliver. It is often only outside activists that can force them to change direction for the benefit of you, the shareholders.
In fact, over the last few years, our actions have led to an increase in aggregate market value of more than $55 billion for shareholders at well over a dozen companies we have targeted that had a market value of under $20 billion when we first invested.
In addition to those mentioned above, these stocks include Genzyme, BEA Systems, Lawson Software, Mentor Graphics, ImClone, Kerr-McGee, Fairmont Hotels, Take-Two, Anadarko, Korea Tobacco and many others. Despite what certain PR firms and others would have you believe, it is obvious that our activities have been to the benefit of ALL shareholders, not just us. I believe our activities are positive for our economy.
In this regard I recommend an article in the Journal of Applied Corporate Finance entitled "Is Carl Icahn Good for Long-Term Investors?" which concluded, among other things" a significant number of Icahn’s targets ended up being acquired or taken private within 18 months of his initial investment. The shareholders of those companies earned abnormal returns of almost 25% from the time of Icahn’s initial investment through the sale of the company." I believe that as a result of our involvement, not only did all shareholders benefit, but that these companies became more productive and more competitive.
From our perspective as long-term and highly successful investors in the energy sector, we believe that the only way to release value at CVR is for the company to be sold or broken up at this time. With our tender offer, we are offering shareholders a win-win. If our offer is successful and our board nominees are elected, we believe that a sale of the company in an open auction process is possible, thus giving shareholders an opportunity for greater profit as a result of owning the contingent value right embedded in our offer.
But even if we are unable to sell the company, you the shareholders will still have received $30 per share for a stock that closed at $26.78 on March 13 and has never closed above our offer.
With your support, our tender offer can be successful and we will have the opportunity to demonstrate our value-creation abilities at CVR as we have done many times in the