Carl Icahn is seeking talks with Greenbrier Cos. (GBX:US) on its strategic options as he disclosed buying a 9.99 percent stake in the railcar maker, four years after failing in a bid to merge the company.
Icahn, an activist investor, contacted Greenbrier’s Chief Executive Officer Bill Furman yesterday notifying him of the investment and suggested they have further discussions “possibly relating to strategic opportunities,” Lake Oswego, Oregon-based Greenbrier said in a statement today.
“Greenbrier noted that no specific proposals or opportunities have been suggested, nor any specific times established for further conversations,” the company said. The shares posted their biggest gain in more than three years at the close.
In February 2008, Icahn proposed Greenbrier and his American Railcar Industries Inc. (ARII:US) held merger talks and disclosed a 9.45 percent stake in the company. The discussions fell through in June that year due to “certain unresolved issues,” Icahn said at the time. Should Icahn again propose a merger with American Railcar, he “likely has a stronger hand today,” said Bascome Majors, an analyst at Susquehanna Financial Group.
“Fundamentally, the mixes of these two companies are complementary,” said Majors, who has a neutral rating on Greenbrier and doesn’t cover American Railcar. Icahn may be looking to capitalize on American Railcar’s stock performance this year “and take advantage of that when another company has underperformed,” Majors said.
Greenbrier has fallen 43 percent this year through yesterday, trailing (GBX:US) a gain of 11 percent for American Railcar and a 7.1 percent gain for the Russell 2000 Index.
Greenbrier jumped $2.78 to $16.73 at the close in New York, its biggest advance since April 2, 2009, to give it a market value of $454.1 million. American Railcar rose 18 percent to $31.16, for its biggest gain since Nov. 26, 2008, to give it a value of $665.3 million.
Icahn began buying Greenbrier stock in October and paid about $40.3 million, including commissions, for 2.71 million shares, according to a regulatory filing today. His Icahn Associates reported holding a 55.6 percent stake in St. Charles, Missouri-based American Railcar as of July 1.
“We believe this purchase of Greenbrier shares validates our business model and strategic decisions,” Furman said in the Greenbrier statement. “We agree that our stock is a very good value opportunity at present pricing. Greenbrier remains committed to enhancing shareholder value and to maintaining an open dialogue with its shareholders.”
Icahn, 76, has pressed for buyouts and management changes to bolster shareholder value at some companies in which he has previously invested. Netflix Inc. (NFLX:US), the largest subscription video service, adopted a so-called poison pill this month to guard against a hostile takeover after Icahn bought a stake of similar size.
“Further discussions possibly relating to strategic opportunities” are planned with Greenbrier management, Icahn’s parties said in the filing today and they also said “the shares were undervalued.”
Messages left for comment with Icahn weren’t immediately returned.
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