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Carl Icahn Pursues Greenbrier Again, Gets Denied

December 19, 2012 | About:
Investor Carl Icahn is at it again with his activist endeavors. This time, a merger bid.

In a 13D filing to the SEC reported yesterday, Icahn proposed that railcar manufacturer, American Railcar Industries Inc. (ARII), where he owns 55.6 percent of its outstanding shares, would acquire fellow railroad freight manufacturer Greenbrier Companies Inc. (GBX) at a price of $20 per share.

Icahn, who has pitched the idea in 2008 of combining the two companies, described that this stock transaction would be a “merger of equals,” unlike previous accounts where Icahn relentlessly pushed for change due to his beliefs of inadequacy in companies during takeover attempts.

On the same day of Icahn’s latest proposal, Greenbrier respectfully declined the offer. In a press release, Greenbrier admitted that the range between $20 and $22 per share that the company and Icahn have discussed “grossly undervalues the company and is not in the best interest of Greenbrier stockholders.”

However, Greenbrier remains willing to continue talks about the merger; the company’s board believes that combining the two “could be beneficial to both companies... and that there could be substantial synergies achieved through such a combination,” the press release stated.

With a market cap of $514.9 million, Oregon-based Greenbrier serves as a leading supplier of transportation equipment and services in the railroad industry. Not only does it build new railroad freight cars, but it also repairs and refurbishes older freight cars, as well as provides railcar parts through its North American facilities.

Icahn acquired Greenbrier in November of this year, purchasing 2.7 million shares, conveniently positioning his stake at 9.99 percent ownership.

Greenbrier stock is up almost 2 percent today, trading at $20.75. It has a P/E (ttm) ratio of 8.6, a P/S ratio of 0.3 and a P/B ratio of 1.2.

With its stock also up today, American Railcar Industries trades higher than Greenbrier at $35.59. The company remains Icahn’s seventh largest holding in his 16-stock portfolio, representing a weighting of 3 percent.

American Railcar’s market value has gained 1.25 points today, and its price has appreciated 46.43 percent year to date. Greenbrier, on the other hand, has declined in market value by 16.10 percent year to date.

The comparison of the two companies is portrayed below.

1355949471092.pngARII data by GuruFocus.com

“The [Greenbrier] Board will not support a transaction that undervalues the Company and the potential benefits to American Railcar, or overvalues American Railcar,” Greenbrier additionally stated in the press release.

Speculators continue to stay tuned for solid decisions about the merger between Greenbrier and American Railcar, as well as whether Icahn will renegotiate his offer to meet Greenbrier’s expectations.

View more of Icahn’s latest trades here. Also view his undervalued stocks, top growth companies and high yield stocks.

About the author:

Dianne Tordillo
Dianne Tordillo is staff writer for GuruFocus.com. She reports on a variety of financial news, primarily dealing with investor portfolios and stock trades. Her articles also highlight insider trades, as well as the many useful features of GuruFocus.

Visit Dianne Tordillo's Website


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