The result? Only 22 percent of the shares were tendered by the time of the deadline, and no shares were purchased. As part of Icahn’s self-inflicted stipulations, he and Icahn Enterprises LP were left to abandon the tender offer. On top of that, Icahn reported to stepping down from 9.5 percent ownership of the company and reducing his shares by 14 percent, according to GuruFocus Real Time Picks.
He now owns 8.13 percent of the company as of Dec. 5, after shedding about 1.2 million shares.
After reporting the tender outcome, Oshkosh issued a press release expressing its relief, stating:
“The board and management team thank shareholders for their continued support…Given today’s tender results, Oshkosh looks forward to moving ahead without the unnecessary expense and distraction of a proxy contest.”
Icahn and his team gave no indication whether they will continue to move forward to elect 13 directors in Oshkosh’s next annual meeting, after attempting (and failing) to elect six board candidates at Oshkosh’s meeting in January. Ever since acquiring Oshkosh in the second quarter of 2011, Icahn has always pushed for his relentless plans to undertake reconstruction of Oshkosh’s management, customary in his activist investing practices.
Throughout the year, Icahn continuously bashed Oshkosh for claiming that the company’s executives do not see the true value in Oshkosh and accusing its board for “congratulating themselves for actions taken in the past rather than addressing challenges the company faces in the present and future,” according to Icahn’s January letter to OshKosh shareholders.
“I am not sure why this management team feels that their past stock performance is an attribute for which they are owed loyalty, considering Oshkosh was trading at $35 per share at the start of 2011 and now trades in the low $20s. The company is also one of the worst performing among its peers in terms of stock performance over the past five years, and the worst in terms of 2012 projected earnings growth,” Icahn said.
In a more recent interview with Bloomberg, Icahn particularly criticized Oshkosh CEO Charles Szews for the company’s purchase of construction equipment company JLG industries in 2006, saying it was the company’s poison pill and that JLG made “four to five CEO changes over the last few years.”
After Icahn prompted Szews to “say adios!” from Oshkosh’s board during the interview, Bloomberg highlighted Icahn’s overall sentiment:
“Management has taken a passive attitude to the future of this company, willing to sit back and watch what happens to the defense, housing and construction industries. Oshkosh needs proactive shareholders to bring a proactive management team together to weather a volatile economy, a shrinking defense industry and a budget constrained municipal environment.”
Since Icahn presented his comments about Oshkosh in January’s letter, Oshkosh stock has risen to $28.07 as of today’s trading. It currently has an annual revenue growth of 19.16 percent and an EBITDA growth rate of -23.4 percent. Recently, its free cash flow has been on a 32.3 percent decline, and a long-term debt of 955 million as of Sept. 30. (10-Year Financials)
While Icahn’s $32.50-per-share offer valued the Wisconsin-based company at $3 billion, Oshkosh maintains a market cap of $2.69 billion, and an enterprise value of $3.1 billion. It has a P/E (ttm) ratio of 11.2, a P/B ratio of 1.4 and a P/S ratio of 0.3.
Oshkosh is a global designer and manufacturer of a broad range of specialty access equipment, commercial, fire, emergency and military vehicles and vehicle bodies. Its Oshkosh Defense division produces tactical military trucks and armored wheeled vehicles. It operates under several brands in addition to Oshkosh, including JLG, McNeilus, Jerr-Dan, Oshkosh Specialty Vehicles, Frontline, CON-E Co., London and IMT.
GuruFocus ranks Oshkosh a one-star Business Predictability, 6 out of 10 in Financial Strength and 7 out of 10 in Profitability and Growth. Its Warning Signs reveal a declining gross margin, cash flow divergence from reported earnings and an Altman Z-Score suggesting bankruptcy risk.
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