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Icahn Draws First 2012 Success With CVR Energy

When making his bid in February, Icahn played both bidder and M&A banker by recommending a few companies that could be acquirers of CVR Energy at a higher price than his $30 a share offer. No bids have emerged.

In his bid, Icahn is offering a "contingent value right" that will give shareholders a cash payment to a possible higher priced takeover bid in coming months, giving current investors no reason to speculate in a near-term bidding war for CVR. Still Icahn expects that CVR is better off in the hands of others than within his investing conglomerate called Icahn Enterprises.

Icahn pointed to Western Refining (WNR), HollyFrontier (HFC), Valero (VLO - Get Report), Marathon Petroleum (MPC) and ConocoPhillips (COP) as potential acquirers.

Icahn's made the case that he can find stragetic aquirers in previous hostile tenders, but CVR is a rare win where shareholders support the notion. Now they should hope theres no catch -- as management indicated. Icahn's offer of a contingent value right expires nine months from a successful tender, meaning that shareholders are, at least in part, relying on Icahn to find a buyer quickly. Less clear is whether CVR Energy shareholders would benefit if Icahn were only able to find a higher price for the company two years down the line.

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. That will likely be his focus in coming months.

Ultimately, Icahn said in his letter that a strategic acquirer or private equity firm could pay $37 a share for CVR Energy, but analysts say 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
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