Icahn extends offer for Federal-Mogul

SOUTHFIELD, Mich. (Dec. 16, 2016) — Billionaire investor Carl Icahn has extended his offer to gain total control over Southfield-based Federal-Mogul Holdings Corp. as the previous deadline expired.

Mr. Icahn, through a subsidiary of his firm Icahn Enterprises L.P., agreed in September with Federal-Mogul to acquire the remaining shares the firm does not own — approximately 18 percent. Mr. Icahn offered to pay $9.25 per share in an all-cash deal, which represents a value 86-percent higher than the supplier's share price of $4.98 on Feb. 26, when Mr. Icahn first proposed the buyout for $7 per share.

Mr. Icahn later extended the deadline to Dec. 15. When the supplier didn't reach an agreement, Mr. Icahn extended the offer again Friday to Jan. 4, 2017.

In November, Mr. Icahn had only secured commitments for about 23 percent of the remaining shares ahead of the deadline, Icahn Enterprises said in a statement. The firm needed 51-percent majority of the remaining shares to take full control of the company.

It's unclear how many shares Mr. Icahn had secured in the latest bid.

The extension is another setback for Mr. Icahn, who reportedly is battling Gabelli Asset Management Co. Investors for the company. The New York Post reported in November that Gabelli, which owns 36 percent of the shares not owned by Mr. Icahn, is angling for a $13 per share bid for the company.

The bid to buy the remaining stake comes after Federal-Mogul scrapped its plan in January to split the company into two separate public entities. Company officers pointed to market conditions as the culprit behind its decision not to split its aftermarket parts division from its powertrain division.

In December 2015, Mr. Icahn won a $1.03 billion bidding war for auto parts retail chain Pep Boys - Manny, Moe & Jack. Market watchers believe Mr. Icahn plans to use the parts retailer as a mainline for Federal-Mogul parts but fear his vertical integration strategy will hurt the company over the long term.

Pep Boys' 800 stores, paired with Mr. Icahn's other aftermarket retailer, the 278-location Auto Plus, make up the fifth-largest retail auto parts chain in the U.S. Even with Pep Boys' stores, Auto Plus would be significantly smaller than rivals Advance Auto Parts Inc., Autozone Inc. and O'Reilly Automotive Inc.

It's unclear whether Mr. Icahn taking full control of Federal-Mogul would expedite that process.

Federal-Mogul shares traded at $10.48, above Mr. Icahn's offer, in Friday morning trading.

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This story first appeared on the website of Crain's Detroit Business, a sister publication of Tire Business.