A majority of Lear Corp. shareholders rejected Carl Icahn's American Real Estate Partners' [AREP] revised takeover bid of $2.9 billion, or $37.25/share, preferring that Lear continue as a stand-alone company. Lear said it solicited 41 other potential buyers but didn't receive a higher offer. "There is an optimism out there by the shareholders that the tough times are all behind us,'' said Lear CEO Robert Rossiter. "I hope they are right, believe me, but I really think there are some bumps in the road ahead.'' Lear's second largest shareholder, Pzena Investment Management (8.6% stake vs. Icahn's 16%) has said Lear is worth $55-60/share. AREP is entitled to receive $12.5m in cash and 335,570 shares as a breakup fee, and could receive as much as $85m if Lear is sold to another bidder within a year. Icahn called his offer a "full and fair price" and said he intends to hold his shares. Lear's shares have appreciated around 50% since October, when it was announced Icahn would take a $200 million stake in the company. Shares of Lear rose 1.6% to $37.50 on Monday, while AREP fell 5.7% to $97.70.
Sources: Press release, Bloomberg, MarketWatch, Reuters, Wall Street Journal
Commentary: Icahn Raises Lear Bid to $2.9B • ACP: The Icahn Premium is Overdone - Barron's
Stocks/ETFs to watch: Lear Corp. (NYSE:LEA), American Real Estate Partners LP (NYSE:ACP). Competitors: Johnson Controls (NYSE:JCI), Delphi Corp. (OTC:DPHIQ), Visteon Corporation (NYSE:VC)
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