Icahn Nears First 2012 Win With CVR Energy Bid (Update 1)

"We are offering shareholders a minimum of $30 per share now, a new board with a shareholder mandate to put the Company up for sale, and the upside from a sale of the Company in the form of the Contingent Value Right. This is a win-win-win for shareholders," said Icahn in February. He pointed to Western Refining (WNR), HollyFrontier (HFC), Valero (VLO), Marathon Petroleum (MPC) and ConocoPhillips (COP) as potential acquirers.

But there's a catch. That contingent value right would expire nine months from a tender, meaning that if CVR Energy shareholders were to tender their shares to Icahn for $30 and two years down the line Icahn were to sell the company for $50 a share, investors would see none of the gain.

The refining business is facing earnings headwinds and a recent round of consolidation. Holly and Frontier merged less than a year ago forming HollyFrontier, while Valero, ConocoPhillips and Marathon Petroleum are all in different stages of spinoff and divestiture plans, making it questionable whether a bid for CVR Energy is likely in the next nine months, even if an acquirer were to eventually emerge.

CVR Energy owns refineries in Kansas and Oklahoma that can process a combined 185,000 barrels a day. In February, the company announced a special dividend, to be financed in part by selling a part of CVR Partners, a subsidiary of the refining specialist that produces nitrogen fertilizer. Prior to tendering an offer for CVR Energy, Icahn had urged the board to focus on an outright sale.

Ultimately, Icahn said in his letter that a strategic acquirer or private equity firm could pay $37 a share for CVR Energy, but analysts said that valuation may be too optimistic.

Not content to take a stake in a company and push for management change or asset realization strategies, Carl Icahn is increasingly submitting tender offers for companies, with recent deals showing unpromising results.

Though Icahn was unsuccessful on multiple takeover attempts in 2011, he still had a strong year, returning over 37%, according to a regulatory filing.

Billion dollar plus-sized minority stakes by Icahn in El Paso (EP) and Motorola Mobility (MMI) netted the investment mogul impressive returns when Kinder Morgan (KMI) and Google (GOOG) paid big premiums for the respective companies. In those investments, Icahn pushed for specific asset spins and patent sales, respectively, which eventually yielded full sales at significant premiums.

For more on Carl Icahn, see his investment portfolio. For more on energy stocks, see the energy stocks bought and sold by hedge funds in the latest quarter.

-- Written by Antoine Gara in New York

« First ‹ Previous 1 2