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Icahn could drop Commercial Metals proxy fight

by Demitri Diakantonis  |  Published December 27, 2011 at 12:16 PM
Carl Icahn is prepared to drop his proxy battle for Commercial Metals Co. if 40.1% of the metal recycler's shares are not tendered to his $1.73 billion offer. But in a letter to shareholders dated Tuesday, Dec. 27, the billionaire activist investor insisted the Irving, Texas-based company should be sold.

Icahn said that he cannot work effectively with Commercial's board to improve the company as a 9.9% shareholder -- his current stake -- even if all his nominees are elected to Commercial's board.

"We wish to state plainly again, that our goal is to acquire the company or see it sold," Icahn wrote in the letter. "We are a synergistic strategic buyer and believe that the company will be a good fit with our existing metals business. Our $15 per share offer puts a floor on a sale.

"However it is clear to me that in order to get this board, a board that I believe is firmly entrenched in this status quo, to move forward with a sale process, it will take the pressure of a shareholder mandate in the form of a large response to our tender offer," Icahn wrote.

Icahn disclosed his $15 per share bid for Commercial on Nov. 28. A week later the board rejected it as "opportunistic" and said it undervalued the company.

On Dec. 19, Commercial recommended to its shareholders that they not tender their shares because the company still believes Icahn's offer comes at a low point in the sector's cycle and undervalues the company. Commercial is in the midst of a restructuring process, which Icahn has criticized.

"As far as I am concerned this board is now trying to save the company from the value destruction flowing from its last 'strategic plan,' " Icahn wrote in his letter.

Commercial's stock opened 10 cents lower at $14.08, valuing the company at just under $1.6 billion.

Commercial is receiving financial advice from Goldman, Sachs & Co. and Moelis & Co. and legal counsel from Sidley Austin LLP.



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Tags: Carl Icahn | Commercial Metals Co. | Goldman | M&A | Moelis & Co. | Sachs & Co. | Sidley Austin LLP.

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