Icahn to Commence Proxy Contest, Tender Offer for Southwest Gas

By Maria Armental

Billionaire investor Carl Icahn disclosed he's taking on Southwest Gas Holdings Inc., offering $75 a share and trying to gain control of its board.

Southwest Gas shares closed 7% higher on Thursday at $69.49 and were slightly down in after-hours trading.

Mr. Icahn, who had challenged Southwest Gas' proposed deal for Questar Pipeline Co., on Thursday published a letter seeking support from other Southwest shareholders.

"We fear the Questar deal can be explained only by management's desire to empire build and entrench themselves with a deal that requires the issuance of 'common equity and equity-linked instruments of $900 million - $1 billion' at ridiculously low prices to 'cherry-picked' friends who will be blindly supportive of Hester and his team, regardless of what other value-destructive deals they pursue," the letter reads.

Southwest Gas has defended the proposed deal to buy Questar from Dominion Energy Inc. as priced fairly and said it would contribute to Southwest Gas' earnings.

Mr. Icahn's Icahn Enterprises LP plans to launch a proxy contest to replace Southwest Gas board along with a tender offer for $75 a share.

The tender offer would be condition on certain things, including the elimination of a recently announced poison pill, according to the letter.

If a third party makes a higher bid, the letter said, "We intend to either raise our bid or support that higher bid."

Write to Maria Armental at [email protected]