Last updated: October 11, 2012 11:40 pm

Icahn fires salvo in move to buy Oshkosh

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Carl Icahn is trying to buy Oshkosh, the maker of armoured trucks, which last year successfully rebuffed demands by the veteran corporate raider for boardroom representation.

The move would follow a victory this week for the activist investor, who gained a seat on the board at Navistar, a struggling truck manufacturer that he has previously suggested could be merged with Oshkosh.

Shares in Oshkosh ended the day up 11.4 per cent to $29.90 in New York in response to a statement from Mr Icahn that he would launch a tender offer at $32.50 per share in cash.

He is the largest shareholder in Oshkosh with a 9.5 per cent stake. An offer of $32.50 would value the company at $3.4bn, including debt.

He said the tender offer would last for 45 days once launched and would be conditional on shareholders electing his nominees as company directors in order to “remove impediments to the offer under Wisconsin law”.

Mr Icahn told the Financial Times that he was no longer pushing for a tie-up with Navistar, but said a sale or spin-off of JLG, Oshkosh’s mobile lifting equipment arm, might be appropriate.

“The parts might be worth a lot more than the whole but it may take some time to realise,” he said, adding that the planned tender was “not subject to financing – we have cash on hand”.

Mr Icahn was defeated in an attempt to elect six candidates to the 13-member Oshkosh board at the group’s annual meeting in January, the company said.

Its board said it would advise shareholders of its position within 10 days of the start of an unsolicited tender offer.

Andrew Obin, Bank of America analyst, called the offer “too low” and added: “We are comfortable with the existing management block-and-tackle strategy.”

However, Mr Icahn said: “The share price was $30 in 2004. What does that tell you about the board?”

In a statement announcing his bid he said management had provided “politicians’ promises”. He said: “The company has only presented a combination of slogans and aggressive long-term projections showing that profitability will increase over the next several years, assuming the economy in the US totally recovers.”

Strong demand for its blast-resistant vehicles amid wars in Afghanistan and Iraq has taken Oshkosh from a small manufacturer to one of the Pentagon’s top suppliers over the last decade.

However, profitability and revenues have declined since 2010 and cutbacks to defence spending, which represents around half of Oshkosh sales, may present further challenges.

Mr Icahn said: “Oshkosh needs proactive shareholders to bring a proactive management team together to weather a volatile economy, a shrinking defence industry and a budget-constrained municipal environment.”

Earlier this year he staged a tender offer for CVR Energy, an oil refiner, accumulating 82 per cent of the company, which has a market capitalisation of $3.4bn. In August he said he would not bid for the outstanding stock.

Shares in Navistar, where Mr Icahn is also the largest shareholder, rose 2.8 per cent on Thursday to $22.61 per share.

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