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Icahn wins battle for CVR Energy
May 7, 2012 / 11:55 AM / 6 years ago

Icahn wins battle for CVR Energy

(Reuters) - Billionaire investor Carl Icahn won control of oil refiner CVR Energy Inc (CVI.N) after shareholders flocked to accept a takeover offer valuing the company at about $2.6 billion, ending a three-month-long war of words with the company’s board.

At least 63 percent of CVR’s shares not already owned by Icahn affiliates had been tendered as of Friday in response to his $30-a-share offer, Icahn said in a statement on Monday.

With the purchase of these shares, which will occur later in the day, the Icahn group will own about 69 percent of CVR’s outstanding shares and take control of the board.

Icahn, who wants to resell CVR, said he would extend the tender offer to May 18. He plans to merge CVR with one of his affiliates if he ends up owning 90 percent of the company -- a prospect analysts said was highly likely.

But selling CVR will not be easy, Icahn himself acknowledged in a March 19 letter to CVR shareholders after making a number of preliminary inquiries to prospective buyers.

He has said he would try to shop the company to larger refiners such as Valero Energy Corp (VLO.N), Western Refining Inc WNR.N, HollyFrontier Corp (HFC.N), Tesoro Corp TSO.N, Marathon Petroleum Corp (MPC.N) and ConocoPhilips (COP.N).

So far no potential buyer has stepped forward publicly.

Eliecer Palacios, an energy sector specialist at investment bank Maxim Group in New York, said CVR could be sold in parts.

“For the right price, there is always someone who is interested in acquiring pipelines, storage tanks and other midstream assets,” said Palacios.

Icahn will probably delist CVR from the New York Stock Exchange if he wins control of 90 percent of its shares, Macquarie Capital analyst Chi Chow wrote in a note to clients.

CVR, which owns refineries in Coffeyville, Kansas and Wynnewood, Oklahoma, has benefited from lower prices for the crudes it processes.

Midwest crude oil prices have been cheaper than those on the Gulf Coast because of high inventories at the oil delivery hub of Cushing, Oklahoma.

That advantage is expected to wane soon, however, as the initial 150,000 barrel per day Seaway crude pipeline begins to relieve some of the glut in Cushing and as refineries begin to ramp up crude purchases for summer gasoline production. That could make CVR less attractive to buyers, analysts have said.

Icahn, who already held a 14.5 percent stake in CVR before the tender offer and was its largest shareholder, will pay about $2.26 billion for the rest of the company.

RESISTANCE ENDS

Seven of CVR’s nine-member board will now be replaced with Icahn’s nominees, the statement said.

CVR also owns and runs a crude oil gathering system with a capacity of about 38,000 barrels per day serving Kansas, Oklahoma, western Missouri and southwestern Nebraska, and holds a majority stake in fertilizer maker CVR Partners LP (UAN.N).

CVR’s board, which had been opposing Icahn’s hostile bid, scrapped a shareholder rights plan, or poison pill, last month after 55 percent of the company’s shares were tendered to Icahn’s initial offer, which lapsed on April 2.

The company had maintained that it was worth more than Icahn’s offer and never recommended it to shareholders. A CVR spokesman declined to comment on the tender result on Monday.

CVR shares have risen about 30 percent since Icahn disclosed his stake in the company on January 13.

The stock, which was trading 1 percent higher at $30.40 on Monday on the New York Stock Exchange, has traded marginally above the $30-offer price for the last two weeks.

The offer for CVR includes a contingent value right that would give shareholders additional cash if Icahn manages to sell the company for more than $30 per share.

Icahn has said he would not settle for a bid below $35 per share.

Reporting by Swetha Gopinath in Bangalore; Editing by Sriraj Kalluvila and Ted Kerr

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