Icahn Affiliate Ups Offer for Lear

Lear Corp. shareholders have a number of days more and a slightly sweetened deal to ponder from a group led by billionaire Carl Icahn. The Icahn-controlled American Real Estate Partners LP agreed to raise its offer for Lear by about 3.5 percent to about $2.9 billion, and the supplier announced it will delay the shareholder vote on the offer.

AREP increased its price for shares of Lear common stock from $36 a share to $37.25. The original offer represented a premium of about four percent over the stock's value at the time it was made in February by Icahn, already the biggest shareholder of the supplier.

'Lear is an excellent company with a strong management team in place,' Icahn said. 'We look forward to working with Lear's team to improve its long-term competitiveness, capitalize on growth opportunities globally and to build an even stronger and more valuable company in the future.'

Larry McCurdy, Lear's lead independent director, has this to say: 'The Lear board concluded unanimously that the original merger agreement with (AREP) was fair and in the best interests of Lear's stockholders. The increased price makes the transaction even more attractive. We believe the revised price represents a meaningful increase in value for Lear stockholders, and we strongly encourage a vote in favor of the revised merger proposal.'

Under the amended pact, if holders of a majority of Lear's outstanding shares reject the proposal, AREP will be entitled to $12.5 million in cash and 335,570 shares of Lear common stock. The company also has agreed to raise the Icahn group's share ownership limitation from 24 percent to 27 percent of Lear's outstanding common stock.

Lear had moved its annual shareholder meeting from June 27 to Thursday in the course of shareholder disparagement of the deal. The company said it will adjourn Thursday's meeting in Wilmington, Del., without a vote and move it to next Monday.

Icahn now owns about 16 percent of the company. Shareholder Richard Pzena, who owns about ten percent of Lear shares, is among some big shareholders who have opposed the deal. He has said since it was announced that Lear would be eventually worth about $60 a share.

'Getting an extra dollar is better than not getting it,' Pzena said. 'It's certainly not even close to enough to make us or some of the other long-term shareholders to change their vote.' Pzena also criticized the $25 million breakup fee, saying such a fee typically is applied only if management decides to sell to another bidder, not because shareholders reject the deal.

'That's really unusual and offensive to all of the long-term shareholders I've talked with,' he added. 'One the one hand, they say we want you to vote. But then they come back and say, 'If you vote against it we're going to charge you $25 million.'

Despite the condemnation, Kevin Tynan thinks shareholders will approve the deal and would have at $36 a share. He believes the silent majority sees this as a best-case scenario for Lear as it and other suppliers struggle alongside the slumping Detroit Three automakers. 'I think it maybe adds a little grease to the wheels in getting the deal done, but very little,' said Tynan of Argus Research, a New York-based research company.

The deal accelerates like AEM and is expected to close by the end of the second quarter, Lear said. The pact is subject to the approval of a majority of Lear shareholders, regulatory filings and other customary approvals. After the proceedings, Lear's shares no longer will be listed on the NYSE or be publicly traded.