Southwest Gas Will Sell Shares to Pay for Deal Icahn Tried to Stop
Southwest Gas Holdings Inc. will sell $400 million in shares to fund its $2 billion acquisition of a pipeline company that activist investor Carl Icahn tried to block.
The U.S. utility owner said Monday it will use the proceeds of the stock sale to repay debt used for its December purchase of Questar Pipelines from Dominion Energy Inc.
The move is almost certain to draw Icahn’s ire: The billionaire investor, who owns almost 5% of Southwest Gas, slammed the Questar acquisition as overpriced and out of step with Southwest Gas’s primary business. Icahn has been trying to take over the Las Vegas-based utility company since it rebuffed his objection and moved forward with the deal.
Southwest Gas’s board has rejected Icahn’s takeover attempts. His latest offer to buy the shares he didn’t already own at $82.50 apiece “fails to compensate Southwest Gas stockholders fairly for the upside potential inherent in their share ownership,” Southwest Gas said on Monday.
Icahn, who has threatened legal action if the company issues the new stock for less than he has offered, has also nominated 10 directors to replace its board at the company’s annual shareholder meeting on May 12. He has also bashed Southwest Gas Chief Executive Officer John Hester, calling him “the quintessential example of what is wrong in corporate America.”