(Reuters) - Carl Icahn won his battle with oil refiner CVR Energy Inc (CVI.N), striking a deal that puts the billionaire investor in the driver's seat to force a sale of the company.
CVR scrapped a shareholder rights plan it adopted in January after Icahn built a 14.5 percent stake, but stopped short of recommending his $2.26 billion offer.
Icahn, who is looking to buy CVR and resell it, expects his offer of $30 per share to flush out better deals and said he will settle for any cash offer of at least $35 per share.
Icahn's bid for CVR includes a "contingent value right" that would enable shareholders to receive additional cash if he manages to sell the company for more than $30 per share.
The company's shares rose 8.5 percent to a 50-month high of$30.25 on Thursday on the New York Stock Exchange.
At this price, Icahn's initial stake of 14.5 percent, which he had picked up for nearly $19 a share as disclosed in a January regulatory filing, will fetch a premium of about 59 percent.
However, Eliecer Palacios, an energy sector specialist at Maxim Group, does not appear very confident of Icahn finding a buyer for the company, given the eroding refining margins faced by the industry.
At least for now, the activist investor plans to merge CVR with one of his affiliates if he ends up owning 90 percent of the company.
About 55 percent of CVR shares were offered under Icahn's initial tender offer that lapsed on April 2.
"The board has decided to permit CVR Energy stockholders to determine whether or not they wish to sell their shares at the price offered by Icahn," CVR said.
CVR, however, added that it was not recommending the tender offer as it still believes that the current offer undervalues the company.
Seven of CVR's nine directors would be replaced with Icahn's nominees if at least 36 percent of CVR shares are offered in a fresh tender.
Icahn said amended tender documents would be sent to shareholders within three business days.
"Icahn has made a lot of runs at a lot of companies. This is about how far he has got ... They do not have a signed merger agreement yet," said Roy Behren a portfolio manager at The Merger Fund
The fund primarily invests in companies involved in pending mergers, takeovers and other corporate reorganizations.
During the new tender offer period, CVR will be allowed to seek alternative acquisition proposals, the company said.
At the heart of the takeover battle are CVR's two refineries in Coffeyville, Kansas and Wynnewood, Oklahoma.
Refineries in the Midwest, which has seen a glut of crude coming from shale fields in the Bakken region of North Dakota and Montana, have been running at nearly full capacity as they are benefiting from refining cheaper crude.
That high utilization has led to an oversupply of refined products in a region where there is little means to ship fuels to other markets. <ID:L2E8DEF2A>
CVR also owns majority interest in fertilizer producer CVR Partners LP (UAN.N), which was taken public in 2007 by Goldman Sachs Group Inc.
Reporting by Swetha Gopinath in Bangalore; Editing by Don Sebastian and Anil D'Silva