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Icahn abandons Commercial Metals offer

by Lou Whiteman  |  Published January 11, 2012 at 1:01 PM ET
Carl Icahn on Wednesday, Jan. 11, walked away from his $1.73 billion hostile bid for Commercial Metals Co. after his bid failed to win sufficient support among the metal recycler's shareholders.

Icahn put Irving, Texas-based Commercial Metals in play in late November, offering $15 per share for the company, but the billionaire investor, who owns about 10% of the company's shares, had threatened to drop his proxy battle if 40.1% of the company's shares were not tendered to his offer by Jan. 10.

The activist investor's Icahn Enterprises Holdings LP in a statement said about 23% of the company's shares were tendered. Icahn said as a result he would discontinue his proxy fight and return the shares tendered and not withdrawn.

Commercial Metals, in consultation with advisers Goldman, Sachs & Co.; Moelis & Co. and Sidley Austin LLP, had rejected the bid as undervaluing the company. Commercial, which posted losses in two of the past three years, has begun a restructuring process independent of Icahn that includes shedding its Croatian operations and other noncore businesses and reducing its head count.

Icahn in a statement said that "since we commenced our proxy fight and launched our tender offer, the Company has made a number of promises to shareholders, which shareholders appear to believe will be beneficial to the stock.

"We respect the views of the shareholders and hopefully their decision not to tender will prove to be the right one," Icahn said.

The withdraw continues a tough patch for Icahn, who had hoped to combine wholly owned PSC Metals Inc. with Commercial Metals' domestic recycling business. The investor last year withdrew a similar offer to acquire Clorox Co. after his bid was rejected by the company and no higher offer emerged, and also made unsuccessful runs at Dynegy Inc. and Mentor Graphics Corp. Icahn is currently pressuring truckmakers Oshkosh Corp. and Navistar International Corp. to explore potential partnerships or a merger. The investor owns about 10% of each company. Icahn has reached a temporary truce with Navistar but is expected to wage a proxy fight at Oshkosh's annual meeting on Jan. 27.