Icahn Enterprises Faces Challenges in Q3, Proposes Tender Offer for CVR Energy
Earnings Disappointment
Icahn Enterprises L.P. (NASDAQ:IEP) shares took a hit on Friday after the company reported disappointing third-quarter earnings. The company’s earnings per unit of 5 cents fell short of the street view of 21 cents, while quarterly sales of $2.22 billion missed the analyst consensus estimate of $2.32 billion.
Cash Reserves Remain Strong
Despite the earnings miss, Icahn Enterprises maintained a strong cash position, with approximately $2.3 billion in cash and equivalents at the holding company and investment funds as of October 31.
Net Income and Adjusted EBITDA
In the third quarter, net income attributable to IEP was $22 million, an improvement of $28 million compared to the same quarter last year. However, adjusted EBITDA for the third quarter was $183 million, down from $243 million in the prior year’s quarter.
Tender Offer for CVR Energy
IEP has proposed a tender offer for its subsidiary, IEH, to buy up to 15 million additional shares of CVR Energy Inc. (NYSE:CVI) common stock at $17.50 per share. This offer price represents a 6% premium over CVR Energy’s closing price on November 7, 2024, and a 5% premium over the average price of CVR Energy stock over the last 7 trading days.
Undervalued Shares
IEP believes CVR Energy’s shares are undervalued and sees this as a good investment opportunity. Currently, IEP beneficially owns, directly and indirectly, 66.3% of the outstanding shares of CVR Energy’s common stock. If the proposed tender offer were to be fully or over-subscribed, IEP would beneficially own 81.3% of CVR Energy’s common stock.
Net Asset Value Decline
As of September 30, Icahn Enterprises’ indicative net asset value decreased by $423 million compared to June 30. This drop was mainly due to a $249 million decline in CVR, a $193 million decrease in Automotive Services, and a $113 million distribution to unitholders, despite a $192 million gain in the investment funds.
Reduced Distribution
On November 6, the Board of Directors of the general partner of Icahn Enterprises declared a quarterly distribution in the amount of $0.50 per depositary unit, which will be paid on or about December 26. This represents a decrease from the previous quarterly distribution of $1.00 per depositary unit.
Current Market Performance
IEP shares are trading lower by 7.10% to $11.98 at last check Friday.
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