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Lear Shareholders Reject $2.9 Billion Icahn Offer

Shareholders of auto supplier Lear rejected a $2.9 billion buyout offer Monday from a firm led by billionaire investor Carl Icahn.

Icahn's American Real Estate Partners had sweetened its offer to $37.25 per share for the auto parts supplier, but at Monday's meeting in Wilmington, Del., some shareholders said Lear was worth far more.

Carl Icahn
Shiho Fukada
Carl Icahn

Officials with Lear, a maker of seats and electronic systems for all major automakers, say the original offer of $36 per share was in the best interest of Lear stockholders, and the increased price makes the transaction even more attractive.

But opposition had been mounting from Pzena Investment Management, the second-largest shareholder behind Icahn, the California State Teachers' Retirement System, and others.

And three major shareholder advisory services -- Institutional Shareholder Services, Proxy Governance and Glass Lewis -- last week reiterated earlier recommendations for shareholders to vote against the proposal.

In its note, Proxy Governance expressed concerns about Lear Chief Executive Officer Robert Rossiter's objectivity and willingness to consider all options that would "deliver enhanced value for shareholders." It also cited improvements in the industry that lead to its doubts that the deal was in the shareholder's best interests.


In response, Lear spokesman Mel Stephens had said: "We frankly think their analysis is superficial and we don't agree."

"When we take a look at it, all the factors and risks, we conclude ... this is a fair deal for shareholders," he said.

A judge from the Delaware Court of Chancery -- an influential court of corporate law where the majority of large public companies are incorporated -- had criticized Rossiter for his front-line negotiating with Icahn. He also raised concerns that Rossiter and other executives reached a deal with Icahn to continue their employment and receive millions in financial incentives.

That judge last month stopped short of blocking the sale, finding no evidence that any action kept the company from getting the best price. But he ordered Lear to make greater disclosures about the sale process before a vote.

Lear has said Rossiter's personal interests did not affect the decision-making process. The final evaluation and decision belonged to an independent special committee and Lear's board.

Richard Pzena, who owns 8.6% of Lear shares through Pzena Investment Management -- the largest stake after Icahn's nearly 16% -- said that Lear eventually would be worth about $60 per share.

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