Carl Icahn Offers $1.73 Billion for Commercial Metals Co.
Billionaire investor, Carl Icahn, launched a bid on Monday to buy Commercial Metals Co. for $1.73 billion.
Commercial Metals Company is a Texas manufacturer that fabricates and recycles metal and steel.
Icahn already owns a 10 percent stake in Commercial Metals, and is offering $15 a share “without any financing or due diligence conditions,” Icahn stated in a letter to board members today.
Get Our Latest News for FREE
The proposed bid is 31 percent more than the stock’s Nov. 25 closing price.
The billionaire investor wants to merge Commercial Metals with his own steel-recycling business, sell portions of the business that aren’t needed, and hire a new management team.
Bloomberg reports that Icahn, in a letter critical towards Commercial Metals, states that, “A below average operating performance fueled by a distracting and misguided international growth plan, combined with a disastrous investment record, has become the defining characteristic of Commercial Metals.”
“We are extremely concerned about the capabilities and behavior of the current board and management,” Icahn said in the letter. “We do not believe the current board is capable or willing to undertake the actions necessary to enable Commercial Metals to compete in the future.”
Louis Meyer, a New York-based analyst at Oscar Gruss & Son Inc. states, “He is coming in there to replace management and run the company better.”
“Given the size of his assets, it’s not an idle threat.”
Meyer says that Commercial Metals will reject the takeover bid and review its strategy, because it’s too small to be dispersed across the globe. He also recommends purchasing shares of their stock, and says that it would only make sense for them to be in Australia, in order to be a key steel provider to China.
Icahn is known for buying companies that are in distress and started his own metals business through the purchase of Philip Services Corp, a bankrupt Canadian scrap metals and industrial service company.
News of Icahn’s buyout offer for Commercial Metals raised the company’s stock price to $14, which is 22 percent above their Nov. 25 closing stock price.
