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Icahn urges sale of CVR Energy

by Lou Whiteman | Published February 14, 2012 at 2:26 PM

Carl Icahn on Tuesday, Feb. 14 turned his attention to CVR Energy Inc., urging the oil refiner and fertilizer producer to put itself up for sale.

The billionaire investor, who as of Feb. 6 held a 14.54% stake in Sugar Land, Texas-based CVR, in a regulatory filing said CVR's small size leaves it at a competitive disadvantage. Icahn said he believes there are numerous potential buyers for the company.

Shares of CVR traded up 2% to $27.53 on Tuesday morning, giving the company a market capitalization of about $2.39 billion.

The disclosure comes a day after CVR said it would sell part of its majority stake in nitrogen fertilizer maker CVR Partners LP to fund both a special dividend and initiate a regular quarterly dividend. Icahn in his filing said he met with CVR chairman and chief executive Jack Lipinski on Monday, saying that "shareholders would be better served if the issuer commenced a process to put itself up for sale" rather than take those actions.

The investor said CVR is vulnerable because of its relatively small size, with just two refineries, and said he believes there are "three or four possible acquirers that could benefit greatly from the synergies that could be realized from a combination." Icahn argued that current high crack spreads -- the difference between what a refiner pays for raw crude and the price it sells its refined products for -- are not being fully reflected in CVR's stock price, making it an interesting takeover candidate for a larger refiner that could extract greater synergies.

Lipinski, according to Icahn, said he would take the suggestions under advisement, and discuss them with CVR's board and advisers.

Icahn Capital LP disclosed Jan. 13 that it had bought a 14.5% stake in CVR for $144.7 million, asserting the company's shares were undervalued. That same day CVR Energy announced its board adopted a stockholder rights plan with a 15% threshold and a dividend of one preferred stock purchase right for each share of the company's common stock.

Icahn has had a rough track record of late when pressuring companies to consider options. Last month shareholders of Oshkosh Corp. defeated a slate of candidates Icahn had proposed for the truckmaker's board, just weeks after the investor walked away from a $1.73 billion hostile bid for Commercial Metals Co. after failing to win sufficient support among the metal recycler's shareholders.

In 2011 Icahn withdrew a similar offer to acquire Clorox Co. after his bid was rejected by the company and no higher offer emerged. He has also made unsuccessful runs at Dynegy Inc. and Mentor Graphics Corp.

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Tags: Carl Icahn | CVR Energy Inc. | energy | PE

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Icahn urges sale of CVR Energy

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