Carl Icahn Going Hostile, Sends Another Letter to CMC


Carl C. Icahn today announced that Icahn Enterprises  Holdings  LP  (a  subsidiary  of Icahn Enterprises LP (NYSE: IEP)), intends  to  initiate a tender offer for all of the outstanding shares of common stock  of  Commercial  Metals  Company  (the  “Company”)  at  $15  per  share. Closing  of  the  tender  offer  will  not  be  subject  to any due diligence or financing  conditions,  but  will  be subject to the redemption by the Company’s Board of Directors of the recently adopted “poison pill” and waiver by the Board of  Directors of Section 203 of the Delaware General Corporation Law, as well as other  customary  conditions.  The  tender  offer will be subject to there being validly  tendered and not withdrawn at least 40.1% of the issued and outstanding shares  of  the Company. That number of shares, when added to the shares already owned by the offeror and its affiliates, represents a majority of the issued and outstanding  shares  of  the  Company on a fully diluted basis. The tender offer will  include  withdrawal  rights  so  that  a  tendering shareholder can freely withdraw any shares prior to the acceptance of such shares for payment under the tender  offer. Mr.  Icahn stated that: “It is disappointing that this Board and management team
rejected our all cash offer to buy Commercial Metals at $15 per share. I believe it  was  incumbent  on the Board, and that the Board’s fiduciary duties required it,  to  allow shareholders to decide whether they wished to sell their Company. Our  tender  offer will be directed to shareholders and will require shareholder action.  After  attempting  to work with the Board, we are launching this tender offer  so  that shareholders can decide for themselves what they wish to do with their  company.” We  urge  you to tender your shares. We have tried and failed to reason with the Board  and  management,  and now it is incumbent upon you to voice your view and urge the Board to respond to shareholder demands. A strong tender offer response will  send  an  unmistakable  message  to the Board that they need to redeem the poison  pill  and  waive  Section  203  so  that  the tender offer can close and shareholders  can  be paid immediately. All tendered shares will have withdrawal
rights so that a tendering shareholder can freely withdraw any shares previously tendered  prior  to  the  acceptance of such shares for payment under the tender offer. The  tender  offer  price  represents  a premium of 31% over the stock’s closing price  on November 25, 2011 (the trading day immediately prior to our previously announced  offer  to  acquire  the  Company), which was $11.45, and a premium of 72.6%  from its low this year on October 3, 2011, which was $8.60. If a majority of  shareholders  accept our tender offer (including shares already owned by the offeror  and  its affiliates), we do not believe that even this Board will stand in  the  way  of  allowing  a  majority  of its shareholders from accepting this
premium  if they wish to do so. However, if the Board, even after hearing from a majority  of  shareholders, fails to lift the poison pill and waive Section 203, we  will leave the tender offer open and seek a court order compelling the Board to  redeem  the  poison  pill and waive Section 203 so that the shareholders can receive  their  money. We  hope  that  even this Board will not decide to waste time and money fighting the  will  of  shareholders in a courtroom battle. But, if they choose to do so, please  know  that  we  will fight this case all the way to the Delaware Supreme Court,  and  it  is  our belief, that we will prevail on the merits and that the court would order the Board to redeem the pill and waive Section 203 so that the shareholders  can  be  paid.  Obviously,  the  greater  the amount tendered, the stronger  our  case  will  be. Commercial  Metals  has consistently been at odds with good corporate governance standards.  Examples of the lack of good corporate governance that are blatantly hostile  to  shareholders  abound  and include: (i) the retention of a staggered board,  (ii)  the  adoption of a poison pill without shareholder approval and at the  extremely  low  trigger of 10%, and (iii) the refusal by the Board to allow shareholders  to  vote  on  whether  our  offer  was  sufficient. In  addition,  the 2011 ISS Proxy Advisory Services Report for Commercial Metals highlights  numerous  other  areas  of  “High  Concern”.  ISS  also  noted  that Commercial  Metals  sustained  poor  total  shareholder  return  performance  as determined  by ISS’ standards. As a result of the Company’s poor performance, it is  extremely  important  to send a clear message to the Board and management by tendering  your shares.

H/T to Street of Walls

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