Shares of American Railcar Industries Inc (NASDAQ:ARII), which is majority owned by activist investor Carl Icahn’s firm, shot up Monday in premarket trade after the company said it is being acquired in a $1.75 billion deal by a fund managed by investment firm ITE Management L.P.
Under terms of the agreement, ITE will pay $70 for each American Railcar share, which is 51% above Friday's closing price of $46.29, and would give the company a market capitalization of $1.34 billion. American Railcar said that including its debt, the deal is valued at $1.75 billion. American Railcar said that including its debt, the deal is valued at $1.75 billion. The deal is expected to close in the fourth quarter.
Billionaire investor Carl Icahn's Icahn Enterprises L.P. (NASDAQ: IEP) is the majority owner of American Railcar, with 11.9 million shares, or 62.2% of shares.
Icahn said it became a majority owner of American Railcar in 2010, and counting Monday's deal, the investment has generated a total return of 423% for a profit of $757.2 million.
American Railcar, based in St. Charles, Missouri, makes, fixes and leases railcars.
“American Railcar is a highly respected company in the railcar industry with a rich history of growth and innovation for over 20 years. The sale demonstrates the value this company, its employees and shareholders have created,” said American Railcar CEO John O'Bryan.
Shares of American Railcar rose 50% in pre-market trading, while Icahn Enterprises stock also shot over 2% to $70.
Contact Uttara Choudhury at [email protected]