Southwest Gas sees improved offer from Icahn
US gas pipeline operator and distribution company Southwest Gas said March 14 it had received a second "unsolicited" offer to acquire the business from Icahn Enterprises, the diversified investment vehicle of billionaire Carl Icahn.
The new and approved cash bid of $82.50/share comes after the initial $75/share offer was rejected by Southwest's board, who described it as "structurally coercive" and "undervalued". Icahn already owns 5% of Southwest's stock. Southwest will consider the new offer but, for now, is telling its shareholders to stay put.
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Icahn is aggressively pursuing an acquisition deal having told Bloomberg he wants to clear out the Southwest Gas board and appoint 10 of his own directors. He described the existing group as a "do nothing kind of board." Bloomberg reported the first offer was worth around $5.2bn and that Icahn would limit his voting rights to 25% of his acquired shares to prevent regulatory interest.
Southwest Gas has around 2mn gas customers in Nevada, Arizona and parts of California, and also now covers midstream gas through its MountainWest Pipelines division, formed from the acquisition of Questar Pipelines from Dominion Energy on December 31. MountainWest has 3,500 km of gas pipelines in the Rocky Mountain region and also operates storage facilities.
Lazard and Moelis & Company are serving as financial advisers to Southwest Gas, while it has appointed Morrison & Foerster LLP and Cravath, Swaine & Moore LLP as legal advisers.