Carl Icahn’s Open Letter To Southwest Gas Board Of Directors

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Sunny Isles Beach, Florida, November 11, 2021 — Today, Carl C. Icahn released the following open letter to the board of directors of Southwest Gas Holdings Inc (NYSE:SWX).

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Open Letter To Southwest Gas Board Of Directors


16690 Collins Avenue, Suite PH-1

Sunny Isles Beach, FL 33160

November 11, 2021

To the Board of Directors of SWX:

We are writing in reference to the blatant disregard of fiduciary duties that has been signaled by your recent (in)actions and statements.

We offered on October 25th to provide SWX with $75.00 per common share for the ∼$1 billion of equity financing the company stated it would seek to help pay for the ill-advised Questar acquisition. We also said we would be willing to consider providing this financing at a per share price higher than $75.00 if SWX should receive a bona-fide superior offer from any other stockholder or third party. And we would agree that if we did not increase our offer, we would support the higher bid. Additionally, we went even further and offered to forego voting rights with respect to all shares we might end up holding in excess of 20% of the voting power of the company as a result of this transaction.

However, our generous – and unconditional – offer was met with deafening silence from you. Instead, you have enabled management to signal that the company might issue a huge block of stock at bargain-basement prices to one or more friendly parties that would presumably protect management from any and all accountability in the future. The board seems to have forgotten that it has fiduciary responsibilities to stockholders – not to management. Your shielding of this inept and self-serving management team – at your own legal peril, no less – is baffling to us, especially in light of management’s abject failure when compared with the management teams at the companies in SWX’s peer group. We would not be surprised to learn that your well-heeled investment banking and legal “defense” team has told you not to worry about your own personal liability. However, remember that it will not be them being forced to give depositions under oath to defend the board’s actions – but rather you. Do you really want to explain to a judge or jury why you thought it was a great idea to sell stock at less than $75 per share when you and your stockholders – as well as the world at large – knew you had an unconditional firm offer from us at $75? You will also have to explain why you allowed a large block of stock to be placed in “friendly hands” at a bargain price merely to protect inept management and keep them totally unaccountable to stockholders.

We are writing to put all on notice that if SWX attempts to dilute existing stockholders by issuing a block of stock at less than $75 per share without first attempting to negotiate with us, we will pursue every avenue available to seek legal redress and to compel SWX directors to fully discharge the fiduciary duties they owe to ALL stockholders. Furthermore, depending on the circumstances, we may also consider bringing legal actions against any purchasers in such a “cheap stock” transaction for aiding and abetting the breach of fiduciary duties by the SWX board at the expense of SWX stockholders.

To preempt any excuses this board might be preparing for not considering our unconditional good faith offer, we would point out the many, many companies we have helped over the years in a cooperative fashion to create literally many hundreds of billions of dollars of value for ALL stockholders of these companies. To name just a few recent ones – FirstEnergy, Caesars, Cheniere, Ebay/PayPal, Motorola, Herbalife, Manitowoc, Forest Laboratories, Cloudera, Hologic. Are we infallible? Of course not. But we believe the handful of “losers” in our record can largely be chalked up to secular changes and not to our actions. What excuse does the SWX management team have for doing so poorly in comparison to their peers and then getting rewarded for their less than mediocre record? But regardless of track records, it is undisputed that we are currently offering the highest price for this proposed stock issuance.

In recent days, management has hinted at perhaps selling 19.9% of the equity of the company’s services subsidiary for $500 million. If that price can be achieved, we would support that sale. But we would not support the sale at a lower price. We also would support other value-maximizing ideas so long as they achieve the highest and best values for the company. Our point is simple – you have a fiduciary duty to try to maximize value for the company and its stockholders. If you do that, you will get our support. If you do not, we will hold you accountable – just as you should hold accountable the management of SWX.

We stand ready to negotiate. We can act extremely quickly as we do not operate leisurely through committees. We can and will respond to any proposals within 24 hours. We have no need of financing or due diligence. We look forward to hearing from you.

Sincerely yours,

Carl C. Icahn