Holding Company Set Up by Icahn to Pursue Takeovers
Takeover strategist Carl C. Icahn said Friday that he was forming a holding company to act as his sole vehicle for acquisitions, including a possible hostile takeover bid for Texaco Inc.
Icahn, Texaco’s biggest shareholder, said the holding company intended to raise up to $3.25 billion through an offering of $500 million to $750 million in common stock and about $2.5 billion in debt securities.
The Icahn group of companies also will contribute equity to the holding company, including its 36.1 million shares of Texaco and its interests in Trans World Airlines Inc. and ACF, a leasing company.
In a news release issued late Friday, Icahn indicated that the new holding company might pursue the acquisition of Texaco, in which Icahn controls a 14.8% stake.
Texaco has rejected Icahn’s proposal for a buyout of the company for $60 a common share, which values the company at $14.6 billion.
Icahn also is running himself and four colleagues for five board seats up for election at the company’s annual meeting in an attempt to pressure Texaco to let its shareholders vote on his buyout offer.
Icahn stated that if his slate was elected but a majority of the board refused to allow a shareholder vote on the offer, he would consider making a hostile bid through the new holding company at yet to be determined terms.
Texaco stock rose 50 cents to $51.875 a share Friday on the New York Stock Exchange.
A spokesman for the White Plains, N.Y.-based oil giant said Texaco had no immediate comment on Icahn’s announcement.
Icahn has indicated previously that he might consider a hostile bid for Texaco, but had yet to make any public moves in that direction until Friday.
Separately, a federal judge in White Plains ordered Icahn’s proxy solicitors to stop making false statements in soliciting support from Texaco shareholders in the board election.
U.S. District Judge Gerard Goettel made the ruling after viewing a videotape of Thursday’s MacNeil-Lehrer Report on the Public Broadcasting System.
On the program, an unidentified employee of D. F. King, an Icahn proxy solicitor, said Icahn had $100 million in escrow to return to shareholders should he be unable to finance his takeover bid.
Icahn has stated that if Texaco put his $60-a-share offer to a shareholder vote he would end his proxy fight and put the $100 million in escrow, for payment to shareholders in the event he could not arrange financing for the bid by the date of the shareholder vote. On Thursday, he raised the guarantee to $300 million.
The money has not yet been placed in escrow, contrary to the D. F. King employee’s remarks on the broadcast. Texaco sought an outright correction, but Goettel said an evidentiary hearing must take place first and only enjoined solicitors from making false remarks.
