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Icahn Takes a Large Step Back from Greenbrier After Company Rejects Second Bid

December 26, 2012 | About:
Activist investor, Carl Icahn, who was once 9.99 percent owner of railcar maker, Greenbrier Companies Inc. (GBX), has now taken a leap back from its ownership and reduced his stake by 65.9 percent, reported on Dec. 21 according to GuruFocus Real Time Picks. The reduction came after Greenbrier rejected Icahn’s second bid, teaming up with American Railcar (ARII) as Icahn oversaw plans to merge the two companies. (To read about his first bid, go to Carl Icahn Pursues Greenbrier.)

Icahn, who owns 55.6 percent of American Railcar’s outstanding shares, now holds a measly 924,262 shares of Greenbrier after the reduction, compared to the 2.7 million he originally owned when he first acquired the stock in November. This currently represents 3.41 percent of Greenbrier’s outstanding shares.

Icahn’s second bid placed Greenbrier’s worth at $22 per share, only $2 higher from Icahn’s original proposal.

On Dec. 20, Greenbrier issued a press release, repeating the same sentiment as its first rejection, stating that Icahn’s offer of $20 to $22 per share greatly undervalues the company and is “not acceptable.”

The press release also addressed a letter written by Icahn Enterprises LP President and CEO, Daniel Ninivaggi, where Ninivaggi stated that they are “extremely perplexed” by Greenbrier’s bid rejections, claiming that Greenbrier had once said that it would “seriously entertain an offer between $20 and $22 per share.”

Ninivaggi further argues:

“On the day prior to the disclosure of American Railcar’s ownership interest in Greenbrier, the company’s stock closed at $13.95 per share. Moreover in the company’s last earnings release, you disclosed that fiscal 2013 railcar deliveries are forecasted to decline by 13% to 23% from 2012 levels and Greenbrier’s stock price declined by 23% during the days following the release. But even if you believe that American Railcar’s $20 per share offer is inadequate, why would your representative encourage us to make the offer in the first place?

“The offer price represents a 57% premium to the closing price of Greenbrier’s stock on the day before American Railcar disclosed its ownership interest in the company and a 46% premium to the volume weighted average price of Greenbrier stock during the 30 trading day period prior to such date. American Railcar’s offer represents full value for Greenbrier and will not be increased under any circumstances.” (Read the original letter)

Icahn Enterprises gave Greenbrier until Dec. 21 to make a yes-or-no decision, which obviously did not turn out in the favor of either of the companies.

Greenbrier’s stock is down 4.6 percent today, trading at $15.54. American Railcar, which is also down today by 3.16 percent, is trading at $31.24.

1356370591188.pngARII data by GuruFocus.com

On GuruFocus, both companies are ranked 6 in Financial Strength and 5 in Profitability and Growth.

American Railway remains Icahn’s seventh largest holding.

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

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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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