Billionaire Carl Icahn was sued by pension funds accusing CVR Energy Inc. (CVI:US)’s biggest shareholder of freezing out minority investors and seeking to bar him from accumulating more stock.
Icahn’s attempt to gain a 90 percent stake in CVR, a level necessary to forcibly acquire remaining shares through a short- form merger, will result in CVR’s shareholders being “squeezed- out of their investment,” according to the complaint made public today in Delaware Chancery Court in Wilmington.
The plaintiffs are the City of Tamarac Firefighter Pension Trust Fund and the City of Miami General Employees’ and Sanitation Employees’ Retirement Trust.
Icahn won an 80 percent stake and control of CVR’s board last month after offering $30 a share and the right to an additional payment if he can resell the company by Aug. 18, 2013. CVR’s board has done nothing to protect shareholders in the deal, the pension funds said.
“The cure is simple -- adopt a poison pill that forces Icahn to negotiate a buyout price rather than allow him to conduct an open market scheme to game Delaware law,” the funds said in the complaint.
Icahn couldn’t immediately be reached for comment on the lawsuit. A phone message left for his assistant wasn’t immediately returned.
CVR rose 3.3 percent to $24.89 at 1:07 p.m. in New York Stock Exchange composite trading.
CVR, based in Sugar Land, Texas, said in a June 4 statement that there won’t be a short form merger with Icahn Enterprises. Icahn didn’t receive 90 percent of CVR’s stock in the tender offering, CVR said.
CVR owns oil refineries in Kansas and Oklahoma capable of processing a combined 185,000 barrels a day. The company also controls CVR Partners LP, a fertilizer maker.
Icahn criticized the company in a March 28 statement as too small and not diversified enough to compete in a cyclical industry like refining.
The case is City of Tamarac Firefighter Pension Trust Fund v. Icahn, CA7597, Delaware Court of Chancery (Wilmington).
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