Irving, Texas-based steelmaker Commercial Metals Company (CMC) announced Monday that after consultation with legal and financial advisors, the company unanimously recommends CMC stockholders reject the tender offer from IEP Metals Sub LLC, a Carl Icahn affiliate, to acquire CMC at $15 per share.
In a filing with the Securities and Exchange Commission, CMC explained the company's new strategic plan will deliver far greater value for the company's stockholders than that reflected in Icahn's offer. Additionally, CMC said that the offer is "opportunistically timed" and "financially inadequate" and "if the offer is consummated, Mr. Icahn's gain would be the expense of the company's other stockholders."
Anthony Masssaro, CMC Lead Director said "It is the Board's clear and unanimous belief that Mr. Icahn's hostile offer substantially undervalues CMC and fails to reflect the long-term value potential of the Company. We believe this is an opportunistic attempt by Mr. Icahn to acquire CMC at a low point in the business cycle and at a time when the execution of our strategic plan--led by the Company's new management team--is beginning to yield results. With his offer, Mr. Icahn is trying to take value for himself that rightfully belongs to CMC's stockholders."
Also on Monday, CMC sent a letter to its stockholders, citing the recent progress the company has made in increasing its profitability and exiting unprofitable ventures. Additionally, the letter urged shareholders to reject Carl Icahn's nominations to the CMC board of directors during the company's annual stockholder's meeting on February 3, 2012.
CMC wrote: "Carl Icahn, the well-known corporate raider, launched a proxy fight to replace three members of CMC's Board--an effort that is in direct support of his hostile tender offer to acquire the Company. We strongly urge you to reject Mr. Icahn's nominees and stockholder proposals, reject his offer and not tender your shares. Don't let Carl Icahn take value that rightfully belongs to you!"
"We believe that our three nominees are vastly superior to Mr. Icahn's, who are closely tied to him, lack the qualifications and independence to serve all stockholders and are merely a vehicle to effectuate Mr. Icahn's attempt to buy the Company without paying a fair price," the letter continued.
Through his affiliate companies, Carl Icahn, who currently owns a 9.98 percent stake in CMC, offered to purchase the company in full on November 28. After the CMC board of directors rejected the offer on December 5, Icahn turned his attention directly to other CMC shareholders, recommending they tender their shares for $15 per share.