Tender offer CVI; risk free profit?

"Icahn’s attempt to gain a 90 percent share of CVR, a level necessary to forcibly acquire remaining shares through a short- form merger, will result in CVR’s shareholders’ being “squeezed-out of their investment,” according to the complaint made public today in Delaware Chancery Court.

The plaintiffs are the City of Tamarac Firefighter Pension Trust Fund and the City of Miami General Employees’ and Sanitation Employees’ Retirement Trust.

CVR’s board has done nothing to protect shareholders, lawyers for the pension funds said.

“The cure is simple -- adopt a poison pill that forces Icahn to negotiate a buyout price rather than allow him to conduct an open market scheme to game Delaware law,” the funds said in the complaint."

http://www.businessweek.com/news/2012-06-06/carl-icahn-sued-by-pension-funds-over-cvr-energy-deal
 
Hello there....


"Activist investor Carl Icahn offered to buy the remaining shares of CVR Energy Inc. (CVI) that he doesn't already own for $29 a share and said he is willing to negotiate the price, but wouldn't consider paying more than the $30 a share he paid in his tender offer earlier this year.

The offer represents about a 0.9% discount to Monday's closing price and values the petroleum company at $2.52 billion.

A representation from CVR wasn't immediately available for comment.

Mr. Icahn earlier this year bought an 80% stake of the Sugarland, Texas, company at $30 a share with plans to immediately resell the entire business for at least $35 a share. Despite hefty refining margins at the company's Midwestern plants in the past few quarters, analysts predicted that the price tag would attract few buyers.

Two weeks ago, CVR Energy said its period to identify an acquirer expired with no offers on the table, and said Mr. Icahn didn't plan to sell the company. Mr. Icahn, who owns about 82% of CVR's shares, noted more than 30 potential bidders were contacted in the recent sales process.

The billionaire investor scored a victory in his battle for CVR in April when a majority of the company's outstanding shares were tendered in favor of his offer. The show of shareholder support prompted the CVR board to strike an agreement with Mr. Icahn that lifted a so-called poison pill blocking hostile takeovers and allowed him to push ahead with his bid. Per his agreement with the company, Mr. Icahn was given the right to replace seven members of CVR's nine-member board with individuals of his choosing.

Last week, CVR reported its second-quarter profit rose 24%, as revenue increased more than expected.

Shares were off by 26 cents to $29.01 after hours. The stock has climbed 56% since the start of the year."

Write to Nathalie Tadena at nathalie.tadena@dowjones.com
http://online.wsj.com/article/BT-CO-20120806-714727.html
 
lol, as usual my analysis is dead right and my trading is horrible. I only have a small position compared to my initial stake. Will take a loss on the trade even though stock will climb to $30 as I sold some during the decline. Botched this trade hugely
 
Was a super obvious buy too. I don't know why I pay so much attention to noise price action that doesn't mean shit. Lesson learned
 
Here are some lessons so other people don't commit the same mistakes
-Took too big of a position to begin with, had 10% of my assets in the stock. Kept wanting to watch every tick of the stock. If you have a fundamentally oriented trade and have an intraday chart or L2 open, you are trading too big
-Trust your read of other people, I thought Icahn was a nice guy to shareholders, he wouldn't screw them here but didn't trust my read completely
-Don't sell fundamentally sound oriented investments during panic selling. If I had a smaller position I wouldn't give a damn about the decline
 
Bought some stock here at 29.56
I believe I understand what Icahn is doing, its a brilliant play. He was afraid a $30 tender wouldn't get the additional 8-9% of the stock he needs(Last 10% he will get automatically). So what he does is to offer to tender at $29 and ANNOUNCE he accepts up to $30, no one in their right mind would do that because the seller will always want the higher price
Also no board of directors in the right mind would take the lower offer when they can get a higher one

What he is doing is trying to get the stock to trade between $29-$30 to attract SPECULATORS like me instead of long-term holders, who just want to make a quick buck. This will help him get the necessary ownership to scoop the last 10% at the same price

Stock is pricing in almost even chance of $29 or $30 being the final tender price when in reality its MUCH more likely he will bump to $30 because the board of directors have a duty to fulfill plus in a pricing situation you never announce how much you are willing to pay so Icahn will get hit on his limit

I bought a bit less than 50% of my intended position because I suspect the stock will sell-off over the coming days allowing me to have a better average.

He choose the board so it seems likely to me he will get his pawns to delay any announcement or negotiations because he needs the stock trading between $29 and $30 for a few days or weeks to attract a lot of speculators. Then its likely he will bump the tender price

I wish I had a prop account, I will run into margin issues here if I keep buying

Worst case I tender on the last day at $29 and lose 56 cents a share
 
"Gentlemen:

As you know, Icahn Enterprises L.P. owns approximately 82.0% of the outstanding shares of common stock of CVR Energy, Inc. We would like to discuss a potential acquisition of the remaining shares of CVR common stock by Icahn Enterprises in a merger transaction pursuant to which CVR shareholders would receive $29.00 per share in cash for their CVR shares. We would of course be willing to negotiate this price with you, but in no event would we consider paying more than $30 per share (i.e., the price we paid in our recent tender offer). In this regard, it should be noted that the recent sale process involving CVR, in which more than 30 potential bidders were contacted, produced no credible offers for the company. We look forward to hearing from you.

Very truly yours,"
 
Bought more at 29.12 ish. Stock offering huge odds for betting on a tender at $30(Or anything above $29 pretty much)
 
I misread something on the Icahn offer. I thought it was a tender offer at $29 but its actually a MERGER. This is a huge difference, in a tender people have a choice on what to do, in a merger initiated by the majority shareholder the other shareholders only have a choice if the board calls a VOTE. But they are not required by the law

http://www.pepperlaw.com/publications_article.aspx?ArticleKey=184

They are only required to treat them with 'entire fairness'. The majority shareholder has the choice of picking an independent committee, independent board or a third party to evaluate the company and do the transaction. Or they cold do a shareholder vote. I see almost no chance the board(Appointed by Icahn) will call a vote. They will just press for $30 and agree to do it

If has to be at $30 since the board has the legal obligation for 'entire fairness' and there is just no way they can defend themselves if they agree at $29 when the other guy said he would go to $30. Icahn behavior doesn't make economic sense and the judge would see that

He would also hurt his reputation and probably be sued. Hence this thing will go for $30
 
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