Friday, 3 July 2015
Last updated 19 hours ago
Dec 21 2010 | 8:52am ET
For Carl Icahn, the enemy of his enemy has become an enemy of his own.
Seneca Capital blasted Icahn Enterprise’s $665 million deal to acquire Dynegy Inc., just weeks after the two hedge funds joined forces to sink the Blackstone Group’s proposed acquisition of the power company.
Employing the time-tested activist technique of all-caps, New York-based Seneca called its erstwhile ally’s offer the “WRONG PRICE at the WRONG TIME for the WRONG REASONS.”
“Facing the likely removal of the CEO-chairman and one other director from the board in the coming weeks, the Board enticed Dynegy's largest shareholder with a virtual ‘give away’ of the company and a $16 million break-fee (nearly $0.90 per share of its holdings) in return for IEP and its affiliates' agreement to vote in favor of a cash transaction from a subsequent bidder and, vitally important to management, to vote against Seneca Capital's consent solicitation,” Seneca said. “In a panic, sparing no tactic to secure a change-of-control and thereby to trigger lucrative severance arrangements, Dynegy short-circuited the customary buyer diligence process by providing for post-signing diligence in the proposed merger agreement.”
Seneca said that Dynegy is worth between $6 and $7 per share; Icahn, which owns 9.9% of the company, is offering $5.50. Seneca owns 9.3% of Dynegy.
Seneca may have a tough battle ahead of it against its fellow hedge fund: Some 37% of shareholders voted for the lower Blackstone bid last month, meaning Icahn can prevail if he convinces another 3% or 4% of shareholders to back him.
May 27 2015 | 2:15pm ET
Support Hedge Funds Care, also known as Help For Children (HFC), by participating in this year's raffle. All proceeds go to support HFC's mission of preventing and treating child abuse. Read more…