LOS ANGELES Greenbrier
Cos. has rejected as "inadequate" a $543-million takeover bid
by Carl Icahn-held American Railcar Industries Inc. (ARII),
although Greenbrier indicated it would consider turning the
tables on ARII and making its own acquisition of the rail car
"Greenbrier has repeatedly made
clear to Mr. Icahn its interest in acquiring American Railcar
at a modest premium, taking into account the current valuation
of American Railcars stock," Lake Oswego, Ore.-based
Greenbrier said in turning down ARIIs offer, adding that
a combination of the two rail car manufacturers could be
"beneficial" to the companies and their shareholders.
But Greenbrier also said that a
$20- to $22-per-share price for Greenbrier shares that ARII had
put forth in previous discussions with Greenbrier prior to its
formal offer of $20 per share "grossly undervalues" the
company. St. Charles, Mo.-based ARII had revealed its offer in
a filing with the U.S. Securities and Exchange Commission (
amm.com, Dec. 18).
Icahns bid for Greenbrier
is his second run at a company in the metals and manufacturing
supply chain within the past year. In January, he abandoned an
unsolicited bid to acquire Irving, Texas-based scrap recycler
and steel producer Commercial Metals Co. after a tender offer
fell short (
amm.com, Jan. 11).
An ARII spokesman declined to
respond to Greenbriers claims. "There isnt much to
say," the ARII spokesman said. "Weve made an offer,
theyve rejected it."
One Wall Street investment
analyst told AMM that he sees the two companies
product lines as "complementary," with intermodal rail cars a
"big part" of Greenbriers business while ARII specializes
in tank and covered hopper cars used to carry such cargoes as
grain and sand.
For its part, Greenbrier said
that it continues to "ramp up" its own tank car output to an
annual rate of 3,000 cars and looks to capture 20 percent of
this market. But it also underlined its "diversified" product
mix and said that tank car demand will eventually slow down and
"be replaced by demand for other rail car types."
In contrast to its description
of ARIIs stock as "fully valued," Greenbrier argued that
its diversified product ranges designed to carry a "broad array
of commodities" has created a platform for future growth.
The Wall Street analyst agreed
with other observers that any tie-up of the two companies could
bring intense antitrust scrutiny from Washington. "The industry
is very concentrated," he said. "I see a stiff review."
Meanwhile, the potential tie-up
has also attracted the attention of shareholder attorneys even
before any transaction has taken place. Block & Leviton
LLP, a Boston law firm specializing in securities law, said it
has "commenced an investigation into possible breaches of
fiduciary duty" by Greenbriers board of directors over
the proposed acquisition by ARII.
Block & Leviton made its
announcement, which noted that ARIIs offer "would fail to
take into account" a more than 30-percent rise in
Greenbriers stock price over the past month, before
Greenbrier rejected the offer.