(Bloomberg) — Billionaire activist Carl Icahn’s investment fund is halving its dividend payout as it plans to sell its stake in CVR Energy Inc. to enlarge.
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Icahn Enterprises LP will pay a dividend of $0.50 per share held in the third quarter, up from $1 per share in the second quarter, according to an earnings statement Friday. The company plans to increase its stake in CVR Energy from 66% to about 81%, a separate statement said.
IEP will make an offer to buy as many as 15 million additional CVR shares at $17.50 each, the statement showed. The price represents a 5.9% premium over CVR’s last closing in New York.
Texas-based CVR Energy saw its shares plunge 24% on Oct. 29 after the refiner suspended its third-quarter cash dividend. Bloomberg Intelligence analyst Brett Gibbs called the move a “major blow” because the annualized dividend yield had led to refining by industry peers. Shares of CVR Energy are down 45% so far this year through Thursday, giving the company a market value of about $1.7 billion.
IEP said it believes CVR Energy shares are undervalued and represent an attractive investment opportunity.
“Rarely have I seen a stock market with such extreme valuations – with some companies trading at irresponsible premiums and others vastly undervalued,” Icahn said in the statement. “These underappreciated situations have created tremendous opportunities for activists.”
IEP reported third-quarter revenue of $2.79 billion, down 7% from the same period in 2023. Adjusted earnings before interest, taxes, depreciation and amortization fell 25% from a year earlier to $183 million.
Icahn and IEP reached a settlement with the US regulator earlier this year with a combined fine of $2 million over inadequate disclosure of Ichan’s commitment to IEP shares. The settlement resulted from a Securities and Exchange Commission investigation following a report by short seller Hindenburg Research accusing the company of inflating asset prices.
Icahn said after the fine that “the government investigation that followed has resulted in this settlement that does not allege IEP or that I inflated the NAV or engaged in a ‘Ponzi-like’ structure.”
IEP cut quarterly payouts in half to $1 per unit in 2023, after maintaining a $2 policy for years. Icahn said at the time that the company will reset and refocus on its roots of shareholder activism. His return to activism has earned the company several board seats since the beginning of this year, including at JetBlue Airways Corp. and American Electric Power Co.
