Icahn Enterprises seeks to boost stake in refiner CVR Energy (updated)

Icahn Enterprises LP

08/11/2024 15:51

(Updates shares, adds analyst comments in paragraphs 6 and 8)
    By Sourasis  Bose and Vallari  Srivastava 
       Nov 8 (Reuters) - Icahn Enterprises  IEP.O , headed by
billionaire activist investor Carl Icahn, said on Friday it has
submitted a proposal to boost its stake in Texas-based refiner
CVR Energy  CVI.N  to 81.3%.
    The investment company, which already owns about 66.3% of
CVR Energy, said it wants to buy 15 million additional shares in
the refining firm for $17.50 per share.
    The proposed purchase price represents nearly a 6% premium
to CVR's closing price on Thursday.
    Shares of CVR rose more than 10% to $18.03 in morning
trading following the offer.
    "CVR's shares are undervalued in the market and represent an
attractive investment opportunity," Icahn Enterprises said in a
statement.
    The offer could provide a floor under (CVR's) stock in times
of weak refining profitability, Tudor, Pickering, Holt & Co
analyst Matthew Blair said.
    CVR Energy operates a 115,000 barrel-per-day (bpd)
Coffeyville refinery in Kansas and a 75,000-bpd Wynnewood
facility in Oklahoma.
    But Blair believes the 6% premium does not provide much
upside to investors and the offer could make an "illiquid stock
even more illiquid", suggesting that CVR's shares are high risk
and cannot be sold without a substantial loss in value.
    Shares of Icahn Enterprises fell nearly 7% in morning trade.
  
    Separately, Icahn's firm said it will cut its dividend by
half to 50 cents per share to fund the CVR deal as well as other
investment opportunities. 
    This marks the second time the company cut its payout since
short-seller Hindenburg Research began shorting IEP's bonds last
year. 
    The Icahn-CVR news was first reported by the Wall Street
Journal on Thursday.

 (Reporting by Sourasis Bose and Vallari Srivastava in
Bengaluru; Editing by Shinjini Ganguli)
 ((Sourasis.Bose@thomsonreuters.com;))