Carl Icahn said Monday that he wants to buy Commercial Metals Co. for about $1.73 billion and combine parts of it with metals recycling businesses that he already owns.
The billionaire investor, who already owns almost 10 percent of Commercial Metals, said that he has no confidence in the company's board and management and will nominate three of his associates to be directors at next year's shareholder meeting.
Icahn called the current board's track record "dismal" and said he doesn't think it will ever do what's needed for the company to compete, such as selling businesses and replacing management.
"Unfortunately, a below average operating performance fueled by a distracting and misguided international growth plan, combined with a disastrous investment record, has become the defining characteristic of Commercial Metals," Icahn said in an open letter to the company's board.
"We have no confidence in management's ability to continue running the company, nor do we have any confidence that the board will ever hold management accountable for poor performance," the letter said.
Icahn's offer of $15 per share represents a 31 percent premium over the scrap metal processor's closing stock price on Friday. Commercial Metals shares jumped $2.64, or 23.1 percent, to $14.09 in morning trading Monday. Shares of Icahn Enterprises LP, a New York company which is making the offer, rose 67 cents, or 1.9 percent, to $36.80.
Commercial Metals, based in Irving, Texas, manufactures, recycles and markets steel and metal products, among other materials.
Icahn, who owns PSC Metals Inc., said he wants to combine the company with his existing metals recycling businesses and sell off the rest of its assets, refocusing on its core North American operations. A new management team would be appointed immediately.
Icahn said the deal would not need financing and that his company is ready to meet, begin negotiations and launch a tender offer for Commercial Metals shares as soon as possible.
A spokeswoman for Commercial Metals said the company had no immediate comment.
On Sunday, the company urged its shareholders to support the reelection of three of its directors at next year's shareholder meeting.
"We have a strong and independent board, comprised of highly experienced professionals with expertise across a wide range of disciplines," Commercial Metals President and Chief Executive Joe Alvarado, one of the directors up for re-election, said in a statement.
That came after the company said last month that Icahn was pushing to have three associates elected to its board and do away with a shareholder rights plan that is blocking a hostile takeover of the struggling steel-parts company.
Icahn amassed his 9.98 percent stake in the company this July after first buying up the stock last August. Days after his stake was revealed, Commercial Metals adopted a so-called poison pill defense that would be triggered whenever any hostile acquirer gets a stake in the company exceeding 10 percent.
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