Carl Icahn’s failed bid for Greenbrier Cos. (GBX) and the sale of most of his shares sent the stock to its biggest three-day drop in 16 months on concern the price may retreat to its level before acquisition talks started.
The shares may tumble to about $14, near Greenbrier’s closing price before Icahn reported his 9.99 percent stake on Nov. 13 and began negotiations on a takeover by his American Railcar Industries Inc., Michael Baudendistel, an analyst with Stifel Nicolaus & Co., said in a report today.
“Our hold ratings on both Greenbrier and American Railcar Industries (ARII) reflect our view that it is best to stay on the sidelines until the dust from the past week’s flurry of news settles,” Baudendistel wrote. Icahn’s role buoyed the prices with a “significant activist premium,” he wrote.
Greenbrier fell 3.1 percent to $15.64 at the close in New York after plunging 22 percent in the previous two trading days. The three-day decline was the largest since August 2011. Icahn disclosed on Dec. 21 he cut his Greenbrier stake to 3.41 percent after the Lake Oswego, Oregon-based company rejected American Railcar’s sweetened offer of $22 a share.
American Railcar dropped 3.5 percent to $31.12. The St. Charles, Missouri-based company said last week that the higher bid, up from $20, was final and wouldn’t be extended. Greenbrier said the offer was too low and urged more talks, saying a tie-up could benefit both manufacturers.
Icahn attempted to acquire Greenbrier four years ago only to have that deal fell through as well. The combination of Greenbrier and American Railcar would form the U.S.’s largest railcar producer, surpassing Trinity Industries Inc. (TRN)
“The latest ownership disclosure will give investors added clarity that Icahn was not bluffing,” Baudendistel said. “It would not surprise us if Icahn sold out of his remaining shares in short order.”
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