Commercial Metals Snubs $15/shr Offer From Carl Icahn
Monday, December 05, 2021 8:39 AM

Commercial Metals Co. (NYSE:CMC) has rebuffed billionaire investor Carl Icahn's proposal to acquire the maker of steel and metal products for $15 a share, saying the offer substantially undervalues the company and is opportunistic.

The Irving, Texas-based Commercial Metals said it believes that Icahn's proposal "substantially undervalues the company and is an opportunistic attempt – at a time when we are at a low point in the economic and industry cycle – to transfer the future value of CMC from its stockholders to Carl Icahn."

On Nov. 28, Carl Icahn's Icahn Enterprises LP (NYSE:IEP) has proposed to acquire CMC for about $1.73 billion or $15 a share.

The billionaire investor is the company's largest shareholder with around 10 percent stake.

"The "premium" that your proposal purports to offer is lacking even when compared to our relatively depressed stock price," CMC said early Monday. Icahn's $15.00 per share proposal represents a small premium of only 11.4% to the Company's stock price of $13.47 as recently as November 15, it added.

The proposal also fails to take into account the fact that CMC – under new leadership – is effectively executing on a strategic plan, which the Board believes will drive substantial value creation, CMC said.

In an open letter to CMC's board last week, Carl Icahn said he is extremely concerned about the  capabilities  and  behaviour  of  the  current  Board  and  management,  and therefore, plans to nominate three individuals as directors at the company's 2012  annual  meeting  of  shareholders,  as  well as make several proposals for shareholder consideration. 

"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. Such actions include, but are not limited to, the sale of non-core assets, the immediate replacement of management, and the refocusing of the business on core operations in North America," Icahn said in a filing with the SEC.

The track record established by the current Board and management team over the last several years is dismal, the letter filed with the SEC said.

"Unfortunately, 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," the letter said.  

"We have no confidence in management's ability to continue running the Company, nor do we have any confidence that the Board will ever hold management accountable for poor performance," Icahn said.    

On Nov. 27, CMC filed a preliminary proxy statement recommending that stockholders support the re-election of three directors to its Board at the 2012 Annual Meeting of Stockholders.  The nominees are Joe Alvarado, CMC's President and CEO, Anthony Massaro, who served as President and CEO of Lincoln Electric Holdings, Inc., a manufacturer of welding and cutting equipment, and Harold Adams, who serves as Chairman Emeritus of RTKL Associates, Inc., a global design firm.

Shares of CMC closed Friday's trading at $13.99. The stock has been trading in the 52-week range of $8.64 and $18.20. Icahn ended at $38.98.