Lear Shareholders Reject Icahn’s Offer

WILMINGTON, Del. (AP) - Shareholders of auto supplier Lear Corp. rejected a $2.9 billion buyout offer Monday from a firm led by billionaire investor Carl Icahn.

 

Icahn's American Real Estate Partners LP had improved its offer in the past week to $37.25 a share, but some shareholders said it was worth far more.

 

''We feel in our hearts that we did the absolute best job for our shareholders,'' said Lear Chief Executive Officer Robert Rossiter. ''Now they have voted, and they voted against the proposed merger. And that's not changed anything that Lear will do, has done or will ever do.''

 

Shares of Lear were trading at $37.09, up 19 cents, following the news.

 

Only two shareholders attended the meeting, and there were no questions or comments about the proposal. Company officials did not immediately release details on the vote, which required a majority.

 

Vincent Intrieri, senior managing director with Icahn Partners, said the firm respected the shareholders' decision and that ''we think we made a very fair offer.''

 

The proposed sale would have paired another private equity firm with an auto supplier at a time of major restructuring within Detroit's auto industry. Icahn is no stranger to the industry—he is a major bondholder in Southfield, Mich.-based Federal-Mogul Corp. and last year acquired about $101 million in debt in Toledo, Ohio-based Dana Corp., which is in bankruptcy.

 

Officials with Lear, a Southfield, Mich.-based maker of seats and electronic systems, said the original offer of $36 per share was in the best interest of Lear shareholders and the sweetened deal made the transaction even more attractive. Icahn's original offer represented a premium of about 4 percent over the stock's value at the time it was made in February.

 

But opposition had been mounting from Pzena Investment Management LLC, the second-largest shareholder behind Icahn, the California State Teachers' Retirement System, and others.

 

Three major shareholder advisory services—Institutional Shareholder Services Inc., Proxy Governance Inc. and Glass Lewis & Co.—last week reaffirmed their earlier recommendations that shareholders vote against the proposal.

 

Proxy Governance raised concerns about Rossiter's objectivity and willingness to consider all options that would ''deliver enhanced value for shareholders.'' It also cited improvements in the industry that lead to its doubts that the deal was in the shareholder's best interests.

 

Rossiter, speaking to reporters following the meeting, said the company would continue its work to make the company competitive but predicted that Lear would ''face more distress in the marketplace.''

 

''I think there's an optimism out there by the shareholders who think the rough times are all behind us, and unfortunately that's not the case,'' Rossiter said. He also said he had no intention of retiring as the company's CEO.

 

Icahn's group still is entitled to $12.5 million in cash and 335,570 shares of Lear common stock, under an agreement reached before the vote. The company also agreed to increase the Icahn group's share ownership limitation from 24 percent to 27 percent of the company's outstanding common stock. Icahn currently owns about 16 percent of Lear.

 

A judge from the Delaware Court of Chancery—an influential court of corporate law—had criticized Rossiter for his front-line negotiating with Icahn. He also raised concerns that Rossiter and other executives reached a deal with Icahn to continue their employment and receive millions in financial incentives.

 

That judge last month declined to block the sale, finding no evidence that any action kept the company from getting the best price. But he ordered Lear to make greater disclosures about the sale process before a vote.

 

Lear has 90,000 employees at 236 facilities in 33 countries.