Icahn Launches Bid for WCI
Updated from 9:45 a.m. EDT
Shares of WCI Communities (WCI) surged 15% Tuesday after activist investor Carl Icahn launched a $22-per-share buyout bid for the homebuilder.
The stock, which has sunk over the past year because of the homebuilder's exposure to a rapidly slowing Florida market, rose $2.83 to $21.80 on the day.
The bid is structured as an "any and all" tender offer by Icahn and his affiliates, High River Partnership and Icahn Management. That means the offer isn't subject to any minimum condition.The tender offer is contingent upon WCI dropping its recently adopted poison pill, which prevents any one shareholder from accumulating too high of a stake in the company. Icahn said he would propose his own slate of board members if WCI does not drop the poison pill and allow the tender offer. The billionaire financier has already said he plans to nominate directors to the board, a move WCI has resisted. "We believe that the board and CEO of WCI have not enabled the Company to maximize the potential of its unique set of assets which trade at a discount to their GAAP book value," Icahn said in a statement Tuesday. "If elected, we expect our slate, in a manner consistent with their fiduciary duties, to ensure these unique assets are properly marshaled through the current residential housing industry downturn." WCI's stock closed at $18.97 Monday, which represents a 20% discount to its book value. The Icahn offer comes in right near book value. After Tuesday's closing bell, WCI said it will review Icahn's proposal, but it urged shareholders to make no action on the tender offer until the board issues a recommendation. In the meantime, the company plans to continue its strategic review into alternatives, including a potential sale. Icahn already owns 14.6% of WCI. Heavy-hitting hedge funds D.E. Shaw and Citadel each purchased stakes in the company over the past few weeks, according to Securities and Exchange Commission filings. Hedge fund giant S.A.C. Capital already owns about 7.8% of WCI. Last month, WCI reported a fourth-quarter loss of $64.6 million, as results were dragged down by land impairment losses totaling $91.4 million. The company's housing developments and condo towers in Florida represent about 85% of its business.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV