Risk, Value and Personal Perspectives

"Billionaire investor Carl Icahn said his $36-a-share offer for Lear Corp. represents 'a very fair bid' for the company, and he won't raise the offer even if he isn't completely confident shareholders will approve the deal...

"During a phone interview, Mr. Icahn said he is surprised that certain shareholders and shareholder advisory firms have voiced opposition to the offer, which was originally put forth in February. He insisted that Lear's short-term risks -- including a union strike against Detroit's Big Three auto makers and falling truck and SUV sales -- represent a substantial uncertainty at this point, making his $36-a-share offer more than adequate.

"'If you look at the risks involved, I think we're paying a fair price for it,' Mr. Icahn said, noting that Lear's recent share price, which closed Friday at $36.50, is much higher than it was last summer when Lear was considered to be at a significant risk given the downturn in the U.S. auto industry. 'I don't think that much has changed in terms of risk equation.'

"Even as risks continue to cloud the U.S. auto industry, a range of investors spanning deep-pocketed private-equity firms to hedge funds have been scrambling to snap up distressed automotive assets that are seen as undervalued. On Friday, Delphi Corp. -- General Motors Corp.'s largest supplier -- inked a labor deal with the United Auto Workers union that allows it to sharpen its focus on the battle among hedge funds for control of the Troy, Mich., auto supplier.

"Mr. Icahn did say he likes the longer-term prospects for Lear, and that is why he has put forth the offer to buy the entire company. Nevertheless, he said he is concerned that even though Lear's board entertained more than 40 offers during a 'go shop' period, no one topped the Icahn bid. 'It worries me also that people didn't bid for it,' he said.

"Lear, meanwhile, said it believes Mr. Icahn's offer is fair and timely given the risks in the industry. 'North America isn't going to turn around overnight,' said Lear's general counsel, Daniel Ninivaggi. 'We're confident that once shareholders have all the information, and the misinformation is cleared up, the shareholders will support this transaction.'"

(“Icahn Defends Lear Bid, Says He Won't Sweeten It.” John D. Stoll and Jared A. Favole. Wall Street Journal: June 23, 2007. pg. A.6)

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