Market Hints Federal-Mogul Is Worth More Than Icahn's Latest Bid

Carl Icahn has raised his bid for the 19 million shares of auto parts maker Federal-Mogul (FDML) that his investment firm doesn't already own, but he still seems to want to get the outstanding 18% of the shares at a discount.

Icahn's Icahn Enterprises (IEP) said in a letter to the board of Federal-Mogul on Friday, June 17, that it was boosting its offer for the shares it doesn't hold to $8 a share. That's up from the $7 a share that Icahn offered for the outstanding public shares back in February, when he first made an overture to roll up what his investment firm doesn't hold.

The market seems to be saying that there is more cash to come above the current bid, which values Federal-Mogul, based in Southfield, Mich., at just over $1.2 billion. Shares of Federal-Mogul closed Friday -- ahead of the announcement of Icahn's increased bid -- at $8.16 a share. The stock has risen another 7% in Monday's intraday trading, getting to $8.90 a share. Shares closed at $8.49 per share.

Meanwhile, the bid, even with the sweetening, doesn't come close to the value Federal-Mogul itself essentially put on its shares in February of last year, when it announced a $500 million rights offering that effectively valued shares at $13.15. Federal-Mogul revealed that rights offering shortly after Icahn's initial bid for the 18% was disclosed. At the same time, the company said it was suspending its previously announced plans to split the business into two enterprises, one encompassing its power-train operations, the other its aftermarket parts business, as it waited to see the benefits of some of the initiatives it had previously undertaken.

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