Southwest Gas rejects Icahn's new tender offer, details plan to spin off Centuri | SWX Message Board Posts

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Msg  73 of 86  at  3/31/2022 1:10:55 PM  by


Southwest Gas rejects Icahn's new tender offer, details plan to spin off Centuri

 from  SNL Energy Finance Daily

Southwest Gas rejects Icahn's new tender offer, details plan to spin off Centuri

Byline: Tom DiChristopher

Southwest Gas Holdings Inc. urged stockholders to hold the line against Carl Icahn's attempt to take control of the company and announced a plan for its recently announced business split.

The company's board of directors unanimously rejected Icahn's offer to purchase any and all outstanding Southwest Gas stock for $82.50 per share, according to a March 28 letter to investors. The board dismissed his initial $75 per share tender offer and called the latest offer "inadequate, structurally coercive and highly conditional."

Board members advised shareholders against tendering their shares to Icahn. They also advised against supporting the slate of 10 board nominees that he put forward as part of a proxy contest ahead of the company's annual meeting May 12.

Southwest Gas reiterated its view that Icahn is attempting to take control without paying a premium to shareholders. "Mr. Icahn openly admits that more value than his $82.50 tender offer is available to Southwest Gas stockholders," Southwest Gas said. "By his own admission, Mr. Icahn's offer significantly undervalues our company and fails to compensate Southwest Gas stockholders fairly for the upside potential inherent in your share ownership."

In his revised tender offer, Icahn said the company's stock value could rise from nearly $70 per share to $110-$150 per share, though the increase would depend on investors backing his plan. Icahn's strategy includes improving operations at the company's core Southwest Gas Corp. utility business as well as selling Centuri Group Inc., an unregulated energy infrastructure services business, and natural gas transmission and storage assets recently acquired from Dominion Energy Inc.

Southwest Gas announced March 1 that it would separate Centuri from its regulated gas business but did not disclose a deal structure. In its March 28 letter, Southwest Gas said it planned to cleave off Centuri into a separately traded company through a tax-free spinoff. Southwest Gas stockholders would receive a prorated dividend of Centuri shares, it said.

The company appeared to dispute Icahn's assertion that the separation was a "desperate measure" to block his takeover bid. "Execution on this strategy began long before Mr. Icahn initiated his campaign to take control of Southwest Gas, and Mr. Icahn's actions threaten to disrupt this thoughtfully developed strategy and the execution we are ready to complete," Southwest Gas said.

Southwest Gas also offered further explanation for why it has not accepted Icahn's offer to finance the equity portion of its nearly $2 billion acquisition of Dominion Energy Questar Pipeline LLC. Icahn and Southwest Gas have given conflicting accounts of their conversations about the proposed financing.

Management said it believes Icahn's financing offer is "yet another tactic to try to disrupt the operations of the company and take control of the company at the expense of other stockholders." Southwest Gas said Icahn is legally prohibited from participating in equity financing while his tender offer is pending.


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