Icahn Enterprises Holdings LP, a subsidiary of Icahn Enterprises LP (IEP) Tuesday announced a direct buyout offer to the shareholders of Commercial Metals Co. (CMC) at $15 per share, as CMC's board rejected the proposal on Monday, terming it undervalued and opportunistic.
Taking the $1.73 billion offer directly to shareholders, Carl Icahn reiterated that the offer was not subject to any due diligence or financing conditions. Icahn stressed that the offer was only subject to a redemption by Commercial Metals of its stockholder rights plan. The company's rights plan has a trigger of 10 percent.
Icahn currently holds 9.98 percent stake in Commercial Metals and the offer needs 40.1 percent of the issued and outstanding shares of the company to be tendered. The offer also included withdrawal rights.
Icahn Enterprises stated that it was ready to fight the case up to the Delaware Supreme Court if the 'poison pill' was not waived.
Irving, Texas-headquartered Commercial Metals has scheduled its 2012 Annual Meeting of Stockholders for February 3, 2012, and recommended its stockholders to vote for the board's proposed nominees and proposals.
Carl Icahn had sent notice to the company on October 19 about an intention to nominate three candidates for election to the board.
On July 31, the company adopted a Stockholder Rights Plan, declaring a dividend of one Preferred Stock Purchase Right on each outstanding share of the company's Common Stock. The plan was to be triggered when an entity or person acquired more than 10 percent or more of the Common Stock, or if a tender or exchange offer is made for 10 percent or more of the Common Stock.
The plan had been adopted following Icahn's rapid acquisition of stake. Each Right would entitle the holder to buy 1/1,000th of a share of Series B Junior Participating Preferred Stock at an exercise price of $70.00.
Later, on October 7, the company exited its Croatian operation and reduced 350 positions elsewhere globally with the closure of four domestic and one international rebar fabricating locations.
By the end of October, the company reported a net loss for the fourth quarter, compared to a profit last year, weighed down by restructuring charges related to the exit from Croatian operations.
On November 28, Icahn sent a letter to the Commercial Metals board intimating a premium of 31 percent over the closing price on November 25. Icahn revealed plans to combine Commercial Metals with IEP's own metals recycling assets. Icahn had criticized the squandering of $2 billion of capital on ill-conceived acquisitions in the last five years, and had asked for the sale of non-core assets, the immediate replacement of management, and the refocusing of the business on core operations in North America.
Yesterday, Commercial Metals rejected the proposal stating it as undervalued and opportunistic as it came at a low point in the economic and industry cycle. The company pointed out that the offer price was a significant discount of 17.1 percent to CMC's 52-week high of $18.09 on February 17.
CMC said its new management was streamlining operations, shedding non-core assets and reducing the company's overall cost structure.
CMC is currently trading at $14.39, up $0.30 or 2.13%, on the NYSE. Over the past year, the stock traded in a range of $8.64 - $18.20.
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