2nd UPDATE: Icahn Gets Majority Support In CVR Tender Offer
08 5월 2012 - 2:58AM
Dow Jones News
Carl Icahn may have won the support of a majority of CVR Energy
Inc. (CVI) shareholders in his hostile takeover bid, but the
billionaire investor faces a potentially steeper climb in the next
step of his plan--finding a buyer for the petroleum refining and
marketing company.
Icahn, one of the CVR's largest shareholders, in February
launched a tender offer worth $30 a share plus a contingent value
right. As of Friday night, roughly 63% of CVR shares unaffiliated
with Icahn had been tendered in support of his bid, giving him
majority ownership of the company and its two refineries in
Oklahoma and Kansas.
CVR's refineries are ideally placed to take advantage of the
boom in North America oil production. CVR buys oil produced in
North Dakota, Canada and other mid-continent regions and sells its
finished fuel at prices closer to that charged by refiners
dependent on more expensive coastal crudes. The price discrepancy
gave the CVR refineries a first-quarter gross profit margin of more
than $20 a barrel.
But with higher vehicle fuel efficiency and increased biofuels
use cutting into long-term fuel demand, Icahn may find it difficult
to attract customers at the $37 a share he said he will seek for
CVR's two refineries.
"I'm not sure anyone is interested in buying refineries," said
Morningstar analyst Allen Good.
Potential suitors include Marathon Petroleum Corp. (MPC),
HollyFrontier Corp. (HFC), Tesoro Corp. (TSO) and Western Refining
Inc. (WNR), all of which are based in the same region as CVR and
recently have said they were on the lookout for potential
acquisitions. The latter two companies have debt issues that could
squelch a potential deal, while the former may blanch at Ichan's
asking price, analysts said.
HollyFrontier spokesman Neale Hickerson declined to comment on
whether the company was interested in CVR's refineries, but said
that refining asset prices seemed inflated in general.
"The problem now is that refining margins so high, everyone has
a robust view of what their assets are worth," Hickerson said.
Spokesmen for Marathon Petroleum and Western Refining spokesman
declined to comment. A spokeswoman for Tesoro wasn't immediately
available.
Ichan scored a victory in his battle for CVR last month when a
majority of the company's outstanding shares were tendered in favor
of his offer. The show of shareholder support prompted the CVR
board to strike an agreement with Icahn that lifted a so-called
poison pill blocking hostile takeovers and allowed him to push
ahead with his bid.
Per his agreement with the company, Icahn will replace seven
members of CVR's nine-member board with individuals of his
choosing.
In addition, Icahn is commencing a subsequent offering period
for shares that haven't already been tendered. That offer will
expire at 11:59 p.m. EDT on May 18.
"We are pleased with the results of our tender offer and are
excited to have CVR join the Icahn Enterprises family," Icahn said
Monday. "We look forward to working together with the CVR
team."
A spokeswoman for the company wasn't immediately available to
comment.
Shares of CVR were at $30.39, up 1.1%, in recent trading. The
stock has surged 60% since the start of the year.
-By Ben Lefebvre, Dow Jones Newswires; 713-547-9201;
ben.lefebvre@dowjones.com; Twitter: @bjlefebvre
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