Commercial Metals Company (NYSE: CMC - News) today announced that its Board of Directors, after consultation with its independent legal and financial advisers, unanimously recommends that Commercial Metals Company (“CMC”) stockholders reject the unsolicited tender offer (the “Offer”) from IEP Metals Sub LLC, an affiliate of Carl Icahn (“Mr. Icahn”), to acquire CMC for $15.00 per share, as it substantially undervalues CMC, is opportunistic and is not in the best interests of its stockholders. The Company filed today a Schedule 14D-9 with the Securities and Exchange Commission (“SEC”) detailing the reasons for its rejection of Mr. Icahn’s offer.
“It is the Board’s clear and unanimous belief that Mr. Icahn’s hostile offer substantially undervalues CMC and fails to reflect the long-term value potential of the Company,” said CMC Lead Director Anthony A. Massaro . “We believe this is an opportunistic attempt by Mr. Icahn to acquire CMC at a low point in the business cycle and at a time when the execution of our strategic plan – led by the Company’s new management team – is beginning to yield results. With his offer, Mr. Icahn is trying to take value for himself that rightfully belongs to CMC’s stockholders.”
Massaro added, “The CMC Board firmly believes that the continued pursuit of the Company’s strategy will deliver far greater value for CMC’s stockholders than Mr. Icahn’s offer and strongly recommends stockholders reject Mr. Icahn’s self-serving $15.00 per share offer and not tender their shares.”
In reaching its conclusion and making its recommendation, the Board considered numerous factors regarding the Offer, including, among others, the following:
- The Board firmly believes that the execution of the strategic plan, led by the Company’s new management team, will deliver far greater value for the Company’s stockholders than that reflected in the Offer.
- The Company is uniquely positioned to take advantage of the cycle recovery as a vertically integrated, low-cost steel producer with a significant international presence.
- The steel industry faced a substantial downturn as a result of the global financial crisis, and the Company took decisive action to respond to these challenges.
- Executing on the Company’s strategic plan is already delivering results.
- The Offer fails to deliver a compelling valuation or meaningful premium, even when compared to the Company’s relatively depressed stock price.
- Even Mr. Icahn has said that he believes the shares are “undervalued”(1). If the Offer is consummated, Mr. Icahn’s gain would be at the expense of the Company’s other stockholders.
- The Offer fails to deliver a meaningful premium. The shares have traded at near-historic lows during 2011. Nevertheless, the Offer provides the Company’s stockholders:
- a significant discount of 17.1% to the Company’s 52-week high of $18.09 per share on February 17, 2011 ;
- no premium to the Company’s stock price of $15.03 per share as recently as May 19, 2011 ;
- a small premium of 4.6% to the Company’s $14.34 stock price on July 27, 2011 ,when Mr. Icahn said that the Company’s shares were “undervalued”; and
- a miniscule premium of 3.9% to the Company’s one-year average price of $14.43 per share (as of November 25, 2011 ).
(1) Mr. Icahn’s Schedule 13D filed with the SEC on July 28, 2011
- The Offer is opportunistically timed.
- The Offer is opportunistic due to the decline in the overall market and the Company’s stock price in the days preceding Icahn Enterprises’ initial proposal to acquire the Company.
- The Offer has been launched at a trough in the business cycle, when the shares are trading at historically low levels.
- Signs of improved results and a market turnaround are beginning to become apparent.
- The Offer is an opportunistic attempt by Mr. Icahn to capture the benefits of recently implemented strategic initiatives before such benefits have been fully realized.
- The Offer is financially inadequate.
- The Board believes that the Offer substantially undervalues the Company. On December 18, 2011 , each of Goldman, Sachs & Co. and Moelis & Company LLC delivered a written opinion to the Board that, as of the date of such opinion and based upon and subject to the factors and assumptions set forth in its written opinion, the consideration proposed to be paid to the holders of shares (other than the offeror and its affiliates) pursuant to the Offer was inadequate from a financial point of view to such holders.
- The Board believes the numerous conditions to the Offer, as well as Mr. Icahn’s track record of unconsummated tender offers, create significant uncertainties about the Offer.
The full text of the Company’s 14D-9 filing is available on the SEC’s website, www.sec.gov and in the “Investor Relations” section of the Company’s website at www.cmc.com.
The Company’s financial advisers are Goldman, Sachs & Co. and Moelis & Company LLC, and its legal adviser is Sidley Austin LLP.