Icahn Pessimistic on Effort to Split USX

Carl Icahn took his battle with USX Corp. management to the company’s annual meeting today, but the corporate raider conceded that his plan to split the steel-energy giant in two could fail.

Icahn, USX’s biggest shareholder, disclosed the pessimism as he urged other stockholders to approve his proposal for separating the company’s healthier Marathon Oil Co. subsidiary from its laggard U.S. Steel business.

About 600 shareholders packed a junior high school auditorium in Findlay, Marathon’s hometown, to hear Icahn and USX management present their views on how to shape the future of one of the biggest U.S. industrial corporations.

The vote on Icahn’s plan is widely seen as a test of how much influence corporate takeover strategists still have, now that much of the muscle to back up their threats--billions of dollars in financing--has atrophied because of a severe decline in their war chest, the market for high-risk “junk bonds.”

Results of the vote aren’t expected for at least a week. But Icahn, who has 13.3% of USX shares, or about 34 million shares, admitted as the meeting began that he might not have the crucial support needed from five or six large institutional investors.

These large institutions, whom Icahn didn’t identify, prefer to allow management to “do it on their own,” he told shareholders.

Under Icahn’s plan, 80% of U.S. Steel would be spun off as a dividend to shareholders. Each shareholder would own stock in U.S. Steel and Marathon that Icahn estimated would be worth a combined value of $48.

The unlikelihood of approval evidently depressed USX’s stock price late this morning. Shares were trading at $33.50 on the New York Stock Exchange, down 50 cents from Friday.