USX Opposes Icahn Plan for Sale of Assets
Takeover strategist Carl C. Icahn’s proposal to split USX Corp.’s energy and steel businesses would weaken the company’s borrowing power and make it more vulnerable to business downturns, USX said Wednesday.
Icahn, USX’s largest shareholder, wants the company to incorporate its steel division into an independent, publicly traded company to be known as U.S. Steel Corp. and spin off 80% of it.
USX management opposes the proposal but has agreed to put it to a non-binding vote of shareholders at its May 7 annual meeting in Findlay, Ohio.
Icahn’s plan is “a simplistic approach to a complicated issue,” the company’s directors said in a proxy statement mailed to USX’s 144,000 shareholders Wednesday. The statement concerns issues to be voted on at the annual meeting.
The directors recommended shareholders reject the proposal, saying it is unnecessary and unwise.
About 65% of USX’s revenue comes from its energy division, while about 31% comes from steel, said USX spokesman William Keslar.
The company said a spinoff would involve “complex tax, legal and business issues.” USX Chairman Charles A. Corry told Wall Street analysts last week that splitting the company would result in tax difficulties.
Icahn, who has a 13.26% stake in USX, has long been unhappy with USX management and believes that the company’s stock price is too low.
Icahn, chairman of Trans World Airlines Inc., has said he will spend $5 million to $10 million on an intensive campaign to persuade shareholders to approve the resolution.
