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BREAKING NEWS: CNBC TRANSCRIPT: CNBC'S "FAST MONEY HALFTIME REPORT" TALKS WITH LEGENDARY ACTIVIST INVESTOR CARL ICAHN TODAY

WHEN: TODAY, MONDAY, OCTOBER 17, 2011

WHERE: CNBC'S "FAST MONEY HALFTIME REPORT"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with legendary activist investor Carl Icahn today on CNBC's "Fast Money Halftime Report."

For more information, visit: www.cnbc.com

All references must be sourced to CNBC.

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SCOTT WAPNER: WELL, FIRST CHESAPEAKE THEN MOTOROLA MOBILITY TODAY EL PASO, TO SAY THAT BILLIONAIRE ACTIVIST INVESTOR CARL ICAHN IS HAVING A GOOD FEW MONTHS IS AN UNDER STATEMENT. TODAY'S DEAL HELPING ONE OF AMERICA'S MOST REVERED AND RESPECTED INVESTORS BRING HIS YEAR-TO-DATE RETURNS TO OVER 30%. CARL ICAHN IS THE BIGGEST INDIVIDUAL SHAREHOLDER IN EP AND JOINS US ON THE FAST LINE IN A FAST MONEY HALFTIME EXCLUSIVE. CARL HOW ARE YOU?

CARL ICAHN: HOW ARE YOU DOING, SCOTT? GOOD LUCK ON YOUR NEW SHOW.

WAPNER: THANK YOU. I APPRECIATE IT. WHAT BETTER WAY TO KICK IT OFF CERTAINLY THAN WITH YOU SIR. BIGGEST SHAREHOLDER IN EL PASO WHAT DO YOU THINK OF THE DEAL?

ICAHN: WELL OF COURSE WE LIKE THE DEAL. I'M GOING TO CALL DOUG TO CONGRATULATE HIM IN A LITTLE WHILE. I THINK IT'S A WIN-WIN FOR BOTH OF THEM. I THINK THAT THESE PIPELINES HAVE BEEN VERY OVERLOOKED VALUES OR UNDER. THEY HAVEN'T REALLY BEEN APPRECIATED. AND I THINK THE SYNERGY MAKES A GREAT DEAL OF SENSE.

WAPNER: WHAT ABOUT THE PRICE? THEY PAY ENOUGH, 37% PREMIUM? I GUESS YOURE HAPPY WITH THAT IT COULD ALWAYS BE MORE.

ICAHN: YEH LISTEN IT COULD ALWAYS BE MORE BUT I WILL TELL YOU THIS, THAT I DON'T THINK -- I KNOW THERE IS SOME CRITICISMS THAT THEY'RE PAYING TOO MUCH. BUT I REALLY DON'T THINK SO. WHILE I CERTAINLY SUPPORT THE DEAL, I THINK EL PASO HAS BEEN A VERY UNDERVALUED SITUATION BECAUSE YOU KNOW, WALL STREET VERY OFTEN OVERLOOKS OR DOESN'T REALIZE CERTAIN VALUES. THE VALUE IN THESE PIPELINES AREN'T JUST NATURAL GAS. I THINK THEY LOOK AT THE WRONG THING. IN BIOTECH THEY SOMETIMES WILL LOOK WHAT DRUG RATHER THAN THE PIPELINE. AND HERE, TO USE THAT PHRASE, PIPELINE HERE IS A GREAT ASSET BECAUSE WHATS SORT OF OVERLOOK THE INTEREST RATES. AND THE PUBLIC, OBVIOUSLY AS YOU KNOW, COULD NOT GET RETURN. THEY GO TO THE BANKS AND THEY ALMOST HAVE TO PAY TO DEPOSIT THEIR MONEY. YOU GO INVEST IN A PIPELINE THAT'S REALLY MONEY GOOD, ESPECIALLY IN EL PASO PIPELINES AND YOU'RE GETTING 6% WITH A GREAT TAX BREAK. SO, YOU KNOW, WHAT COULD BE BETTER FOR AN INVESTOR? SO HERE IS EL PASO SELLING IT AT 12% RETURN OR A 13% RETURN WHEN YOU BUY IT INTO THE MARKETPLACE AND YOU CAN TAKE YOUR PIPELINE ASSETS AND SELL THEM TO THE MASS LIMITED PARTNERSHIP AT 6%. SO THERES A GREAT ASSET RIGHT THERE AND THAT'S WHY WE BOUGHT SO MUCH OF IT. YOU KNOW WHAT I MEAN BECAUSE IM CERTAINLY NOT PURPORTING TO BE A GREAT NATURAL GAS EXPERT, BUT I LIKE THAT TOO BECAUSE OF ALL THE SHALE NOW COMING TO FRUITION.

WAPNER: NO DOUBT WHAT DO YOU THINK REGULATORS ARE GOING TO SAY?

ICAHN: YOU KNOW, I DON'T KNOW. I THINK IT GOES THROUGH. I CERTAINLY -- I WAS READING "THE WALL STREET JOURNAL" TODAY AND MR. KINDER SAID THAT HE WOULD DO WHAT IT WOULD TAKE. SO I THINK THEY WOULDN'T GO THROUGH THIS IF THEY DIDN'T UNDERSTAND THAT. BUT EL PASO ON ITS OWN IS A GREAT COMPANY. I THINK SYNERGIES ARE GREAT. I CERTAINLY SUPPORT THE DEAL. BUT IF THIS -- I THINK THE DEAL WILL GO THROUGH, BUT I REALLY THINK EL PASO IS GREATLY UNDERVALUED, ANYWAY.

WAPNER: LET ME TALK ABOUT SOME OF YOUR OTHER POSITIONS. YOU HAVE ALMOST A 10% STAKE IN NAVISTAR, CORRECT?

ICAHN: THAT'S WHAT WE REPORTED, YES.

WAPNER: ALL RIGHT. WE'LL CONSIDER THAT A CONFIRMATION. GOLDMAN SACHS DOWNGRADED THAT STOCK TO A SELL TODAY IN PART ON LOWER DEMAND FOR MILITARY VEHICLES. DO YOU HAVE ANY CONCERNS ABOUT THE TYPES OF THINGS THEY'RE TALKING ABOUT AS YOU HEAR THEM DOWNGRADE WHICH OBVIOUSLY HIT THE STOCK AND THUS YOUR STAKE?

ICAHN: WE DON'T BUY THESE THINGS FOR YOU KNOW WEEK TO WEEK OR MONTH TO MONTH, THE RETURNS SO MUCH. AND I THINK WHAT YOU HAVE TO NOTICE IN NAVISTAR IS FIRST OF ALL THE MILITARY ISN'T ALL THAT IMPORTANT TO THEM. IF YOU LOOK AT THE PURCHASES OF TRUCKS OVER THE LAST, YOU KNOW, FOUR OR FIVE YEARS, YOU HAVE A FLEET OF TRUCKS IN THE COUNTRY THAT ARE SIX, SEVEN YEARS OLD AND THEY CAN'T -- THEY CAN'T KEEP TRUCKS FOR MUCH LONGER THAN THAT. THEY CAN'T MAINTAIN, THEY CAN'T PAY THE MAINTENANCE. SO I THINK IF YOU LOOK AHEAD A FEW YEARS WITH NAVISTAR, YOU SEE GOOD THINGS.

WAPNER: WHAT'S THE END GAME FOR YOU? WHAT DO YOU WANT TO SEE HAPPEN? YOU'VE HAD PRELIMINARY MEETINGS WITH MANAGEMENT.

ICAHN: YOU KNOW, WE MENTIONED THE 13D. WE WERE TALKING THAT WE MIGHT -- I THINK WE SAID THAT WE MIGHT CONSIDER, THINK ABOUT REPRESENTATION ON THE BOARD.

WAPNER: BUT THEY HAVEN'T AGREED TO THAT YET?

ICAHN: WELL, I REALLY CAN'T TALK ABOUT ANY OF THIS PUBLICLY. OBVIOUSLY IF THEY AGREED IT WOULD BE PUBLIC.

WAPNER: YEAH. LET ME GET YOUR OPINION ON RESEARCH IN MOTION. YOU DO NOT HAVE A STAKE AS OF NOW IN RESEARCH IN MOTION. IS THAT CORRECT?

ICAHN: YEAH. THESE RUMORS GET OUT AND I CAN ONLY SAY WE DON'T DIGNIFY THEM. BUT --

WAPNER: WOULD YOU CONSIDER TAKING A STAKE IN RESEARCH IN MOTION? OBVIOUSLY, A STOCK THAT A LOT OF PEOPLE LOOK AT NOW AND YOU CAN'T HELP BUT NOTICE THE FACT THAT IT'S BEEN TREMENDOUSLY BEATEN DOWN. IS THAT RIPE FOR AN ICAHN PICKUP?

ICAHN: I CAN ONLY SAY RIGHT NOW THAT IS CERTAINLY NOT ON OUR RADAR SCREEN.

WAPNER: OKAY. AND LET ME FINISH BY ASKING YOU, WHAT DO YOU THINK WENT WRONG WITH CLOROX? WHY DIDN'T THAT WORK OUT FOR YOU?

ICAHN: WELL, YOU KNOW, I THINK CLOROX IS -- YOU KNOW, WE THOUGHT IT WAS UNDERVALUED IN THE LOW 60s. I RESPECT THE MANAGEMENT. IN CERTAIN COMPANIES, WE THINK MANAGEMENT IS POOR. WE DIDN'T THINK THAT THERE. WE DID THINK IT WOULD MAKE SENSE TO SELL IT. A LOT OF THE SHAREHOLDERS FELT, AS THE COMPANY DID, THAT NOW IS NOT THE RIGHT TIME TO SELL IT. THEY THINK THAT THEY'RE -- OBVIOUSLY, THEY THINK THAT THE COMPANY UNDERVALUED AND THEY THINK GOING IT ALONE AT THIS TIME MAKES SENSE. I THINK DON IS DOING A GOOD JOB AND IT JUST WASN'T THE TIME. AND SO WE RESPECT THAT. OBVIOUSLY, ON PAPER WE'VE MADE A PRETTY GOOD PROFIT, SO --

WAPNER: CARL, THANKS SO MUCH FOR CALLING IN.

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