Lear Corporation’s board is recommending that shareholders in the auto parts supplier vote in favour of a buyout offer valued at about $US2.8bn from a group affiliated with billionaire investor Carl Icahn, according to a federal filing cited by a news agency on Tuesday.
According to The Associated Press (AP), Lear said in a proxy statement filed with the Securities and Exchange Commission that the board determined the offer is fair and in the best interests of the Southfield-based company and its stockholders. The board reportedly considered the recommendation of a special committee of independent directors.
AP said that, under the agreement proposed last month, Icahn-controlled American Real Estate Partners is paying $US36 a share, and Lear said last month that amounts to about $2.8bn. The buyers would also assume about $2.5bn in debt.
Lear reportedly said in the SEC filing that JP Morgan Securities reviewed the offer and decided that the agreement was ‘fair from a financial point of view to such holders of shares of our common stock.’
According to AP, the filing also details the meetings leading up to the announcement of the offer last month. It reportedly said Bob Rossiter, Lear’s chairman and CEO, met on 16 January with Icahn and others in New York, where the buyout idea was raised.
‘Icahn suggested that the company might be able to take a longer-term focus, more aggressively pursue restructuring initiatives and be better positioned to withstand volatile industry conditions as a private company with a strong financial sponsor,’ the filing said, according to the Associated Press.
AP said Icahn owns about 16% of the company and the deal faces opposition from some shareholders, some of whom have filed lawsuits trying to block the agreement. Lear reportedly says the suits are without merit.
Under the terms of the agreement, Lear, whose products include seats and electronic systems, may solicit alternative proposals and has said it intended to consider such proposals. That deadline is the end of the day next Monday. Lear also may, at any time, respond to unsolicited proposals, the AP report added.