Oil refiner CVR Energy Inc. has signed a deal with billionaire investor Carl Icahn that would allow him to complete his $30 per share tender offer. CVR shares jumped 8 percent in premarket trading Thursday.
Icahn said earlier this month that investors owning 55 percent of the company's shares outstanding had accepted his bid, but he couldn't actually buy the stock until CVR's board removed a "poison pill" rule preventing a sale of the company. CVR has now removed that barrier, giving its investors the ability to tender their shares.
CVR's board said Thursday that it believes the company is worth more than Icahn's offer, but it decided to leave the decision in the hands of its shareholders.
Icahn wants to take control of CVR and then sell the Sugar Land, Texas, company. He is offering $2.26 billion for the shares he doesn't already own, valuing CVR at about $2.6 billion. He needs at least 36 percent of CVR's outstanding shares to take over the company. If he doesn't receive them, he'll terminate his offer.
If Icahn takes control of CVR, he'll immediately put it back up for sale at $35 per share, a 17 percent markup from his tender offer. He'll push to get the company sold quickly to make the most out of operating conditions that generated strong profits for CVR in the first quarter.
"If the company cannot be sold in the next two months there are major risks to earnings in the short and intermediate term," Icahn said.
CVR, which makes petroleum fuels and nitrogen-based fertilizers, increased profit in the first three months of the year thanks to rising prices for gasoline and other fuels, combined with its ability to blend a cheaper variety of crude.
The company earned between $140 million and $150 million in operating income in the January-March quarter, according to preliminary results released Thursday. That's up from $110 million in the same period a year ago. It generated quarterly sales of between $1.8 billion to $2.1 billion, compared with $1.2 billion last year.
Shares added $2.29 to $30.16 before the market opened Thursday.