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Icahn Bid Rejected by Commercial Metals

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IcahnCommercial Metals Co. (NYSE:CMC) has rejected billionaire investor, Carl Icahn’s $1.73 million bid, calling the bid as “bargain basement” and “opportunistic”.

The offer from Icahn Enterprises (NYSE:IEP) was rejected on Monday by the scrap metal processing company. Icahn Enterprises offered an unsolicited bid of $15 per share, which would value the company at roughly around $1.73 billion. Monday was set as the deadline for receiving a response from the board of Commercial Metal.

The board members of Commercial Metals said that the offer by Icahn substantially undervalues the company and called the proposal as an opportunistic attempt. After consultation with independent legal and financial advisers, the company came to this decision. The company also said that Icahn undervalues the benefit of the strategic plan that is being implemented by the company’s Chief Executive Officer and the board members.


Icahn had said that the track record of the current board members has been dismal and expressed his disappointment over the incapacity of the board to do what is necessary to become profitable. He suggested severe moves such as making changes in the management and selling parts of its businesses.

In an open letter that was addressed to the board members of Commercial Metals, Icahn accused the below par performance of the company that was causing distraction in the company’s growth plans in the international market. He said that the current management is incapable running the company. He also accused the board of being incapable of holding the management accountable for its mistakes and dismal performance, which has come to define Commercial Metals.

The billionaire is offering around $15 per share, which represents a premium of around 31 percent over the stock price of the scrap metal recycler on Friday. Commercial Metals manufactures, markets and recycles steel and other metal products, along with a few other materials. Icahn is planning to merge the operations of the Texas based metal processor with that of PSC Metals Inc. Icahn owns PSC Metals and a combination of the recycling businesses of the two units will help in reduction of costs and would also lead to selling of certain assets. The stocks have been trading at its lowest levels since the recession ended in 2008.

The spokesperson from Icahn Enterprises was unavailable for comment and it is unclear whether Icahn will opt for a hostile bid, after being rejected unanimously by the board members.

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edliston
Post Written By: Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.


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Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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