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Icahn's January Plays Could Ruin His 2012 Plans

Stocks in this article: CMC OSK NAV IEP

NEW YORK ( TheStreet) -- Carl Icahn's Icahn Enterprises (IEP) has a slate of January deals deadlines - including a $1.73 billion tender offer for Commercial Metals (CMC) - that could quickly change the fortunes of the famed activist who was able to return 37.4% in 2011.

On Jan. 10, Icahn's $15 tender offer for the shares of scrap metal and steel rebar giant Commercial Metals expires. Meanwhile, Icahn's recommendation to merge two of his biggest holdings in truck builders Navistar (NAC) and Oshkosh (OSK) will run up against a key shareholder proxy deadline at the end of January.

Carl Icahn

Pulling off both deals won't be easy, especially given the shareholder activist artist's approach leading up to the votes. While Icahn resolved a proxy threat with Navistar, he's characterized Commercial Metal's management as "Boy Scouts," with Oshkosh being little better as he pushes for his slate of directors -- and the eventual takeovers of both companies.

Not one to take a wait and see approach to investing, Icahn is pushing for immediate Commercial Metals and Oshkosh action, though both companies believe they will soon benefit from a construction recovery that will boost shares.

But Icahn isn't interested in timing a multiyear share recovery based on construction or economic trends. About Commercial Metals, Icahn told TheStreet, "We believe it's going to be business just the same over the next year or two," explaining that he doesn't want to keep his money with the company's management for such a long period of time and has little faith in their record, regardless.

Icahn's tender offer is set to expire at midnight on Jan. 10 and -- if less than 40.1% of shareholders tender their holdings -- he will withdraw his offer. Meanwhile, if he gets shareholder support, Icahn will continue with a proxy campaign as a 50% shareholder, taking the case to the Delaware Supreme Court if need be, according to a January letter. Icahn's offer represented a 31% premium to Commercial Metals' shares when the bid was made in late November. Still, it was 60% less than pre-recession levels and 2011 highs above $17 a share.

Investors who benefitted from a late year surge in Commercial Metals' stock fueled by Icahn's tender and some forecasts of a recovery in related construction and steel markets now have to decide whether to cast their lot with Icahn. In doing so, their interests may diverge with the activist, who's seen the value of his shares rise significantly to $172 million since taking a near 10% stake in the company in mid-2011, according to Bloomberg data.

"I'm trying to figure out what Mr. Icahn's threats are more than just hot air to support his underlying shares in the company," says Louis Meyer of Oscar Gruss & Sons, a brokerage. Currently, Commercial Metals shares sit near Icahn's $15 a share tender, making the offer light on economic incentive, says Meyer. He adds that, "it would be nice to see if Carl Icahn would raise his price, but chances are that's not going to happen." Meyer rates the company a "buy" with a $17 a share price target.

For more on Carl Icahn see his portfolio of stock holdings. For more on Commercial Metals see, TheStreet's portfolio of top yielding metals and mining stocks. To read about Oshkosh and Navistar shares respectively, see 6 mid cap growth stocks to watch for and David Tepper's Appalosa Management Portfolio.

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