Activist investor Carl Icahn has confirmed plans to offer to buy Oshkosh Corporation with a US$32.50 per share cash offer. Icahn has also said he intends to nominate directors for election to Oshkosh’s board at the company’s 2013 annual meeting, with his offer conditional on those directors being elected.
In response to Icahn’s tender offer for “any and all” of the outstanding common shares of Oshkosh, the specialist vehicles producer noted that at its 2012 annual meeting, Icahn was unsuccessful in his attempt to elect any of his six director nominees to the Oshkosh board of directors, adding that the board, in consultation with its financial and legal advisers, will advise shareholders of its position regarding the unsolicited tender offer within ten business days from the date of commencement by making available to shareholders and filing with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9.
Oshkosh advised shareholders to take no action at this time pending a review of the unsolicited tender offer by its board.
Icahn, who already holds a 9.5% stake in the Wisconsin-based company, has alleged that Oshkosh has failed to deliver on pledges to improve profitability.
According to Icahn: “Management has taken a passive attitude to the future of this company, willing to sit back and watch what happens to the defence, housing and construction industries. Oshkosh needs proactive shareholders to bring a proactive management team together to weather a volatile economy, a shrinking defence industry and a budget constrained municipal environment.”
Icahn’s 14.9% stake in Navistar has fuelled continuing speculation of a merger between the two truck producers and Navistar has recently agreed to the appointment of two new board members chosen by two of its key investors – Icahn and MHR. In exchange, Icahn and MHR have agreed that they will not run a proxy contest at the 2013 annual meeting and will support the board’s nominees, as well as certain other provisions. Vincent J Intrieri and Mark H Rachesky will replace Eugenio Clariond and Steven J Klinger, who will retire. Intrieri represents Icahn and has worked for the investor since October 1998 in various investment related capacities. Since 1 January 2008, he has served as Senior Managing Director of Icahn Capital, the entity through which Icahn manages investment funds. Rachesky is the President of MHR Fund Management, an investment firm that he founded in 1996.
Navistar has also agreed to add a third, as-yet unnamed director designated by Icahn Partners and MHR Fund Management. This third new director will replace an existing Navistar director. The three new directors will stand for election at the company’s 2013 Annual Meeting of Shareholders.
Icahn has previously said Oshkosh should consider selling the JLG business, which makes construction lift equipment. Oshkosh shareholders rejected his attempt to install six candidates onto the company’s 13-member board in late January 2012.
In an interview on Bloomberg TV, Icahn rejected the idea of combining the defence segments of Oshkosh and Navistar, saying: “There’s no chance of that. We’re not interested in that. The real interest in Oshkosh has to do with the JLG division and that has nothing to do with Navistar so there really is no relationship.”
He also asserted it’s time for Oshkosh Chief Executive Officer Charles Szews “to say adios.”
Some analysts have already indicated the US$32.50 offer price is too low. BofA Merrill analysts have commented: “The offer seems too low.” Last month, the analysts put a US$35-38/share price tag on the stock, which rose 11% to US$29.86 immediately after Icahn’s unsolicited bid was revealed. Throwing in a “customary” 20% to 30% change of control premium, that gets you up to anywhere from US$42 to US$49 per share, the analysts noted.