Icahn’s buy of CMC stake seen linked with plan for PSC Metals
Nov 23, 2010 | 01:30 PM
| Sean Davidson
Carl Icahn's latest foray into the scrap market via the purchase of an estimated $30-million stake in Commercial Metals Co. (CMC) has sparked speculation about the the wealthy investor's strategy—known for buying undervalued assets.
Icahn has a penchant for picking up undervalued shares, fine-tuning companies and then selling them at higher share values. And he is likely to follow a similar strategy with the purchase by White Plains, N.Y.-based Icahn Capital LP of a 2.15-percent stake in the Irving, Texas-based steel producer and metals recycler.
Based on a CMC share price of $12.39 at the end of September, he would have paid about $30 million, analysts said, although no financial terms were included in the filing with the U.S. Securities and Exchange Commission from earlier this month.
"They probably see some value in the name. They may think the stock is out of favor right now, so it may be a good long-term play," one New York-based analyst said.
CMC's shares closed at $15.37 Tuesday on the New York Stock Exchange, up 10.7 percent from its Nov. 1 close at $13.88 per share but 15.5 percent below its 52-week high of $18.18 per share.....
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