Activist investor Carl Icahn has made a $2.43 billion offer for U.S. auto parts supplier Lear, the two parties said on Monday.
Icahn affiliate American Real Estate Partners said in a filing with the U.S. Securities and Exchange Commission that it offered to buy the Southfield, Michigan-based Lear for $36 a
share in cash.
Lear shares surged 12% on the news, to the highest level since mid-2005.
"Many investors are anticipating a higher bid to come in," said William Lefkowitz, options strategist at brokerage firm vFinance Investments, Inc. in New York.
He noted higher-than-normal interest in February and March calls that give the right to buy the company's shares at $40.
"We've been saying that the company is worth somewhere in the mid-$40s (per share), so it looks to be a good deal for him and not such a great deal for shareholders," said Morningstar equity analyst John Novak. "He's buying at a good time; the company has gone through a lot of restructuring."
Icahn's offer represents a 3.8% premium to Lear shares' closing price of $34.67 on the New York Stock Exchange on Friday.
The total deal value is calculated based on 67.4 million shares outstanding as of the company's last quarterly filing with the U.S. Securities and Exchange Commission.
Billionaire Icahn is well known for pressuring the management of companies he invests in to improve performance and to buy back shares. He disclosed plans to seek a seat on the board of No. 2 cell phone maker Motorola last week.
In a note to clients, Merrill Lynch analyst John Murphy wrote that given Icahn's existing 23.6 percent stake in Lear, "he is benefiting materially from the run-up in the stock."
By Friday's close, Lear shares had run up about 60% since Icahn disclosed in October he had upped his stake in the company to 16% of its shares outstanding.
Lear's results have suffered in recent years, reflecting troubles at its major customers -- the big Detroit automakers General Motors, Ford Motor and the Chrysler unit of DaimlerChrysler.
The company's 2006 net loss was $707.5 million.
Lear agreed to sell its North American automotive interiors business to Wilbur Ross's International Automotive Components Group last year. Ross makes a practice of buying companies in troubled industries and merging them together.
Lear said in a statement that the takeover proposal calls for Chairman and Chief Executive Bob Rossiter and the rest of the company's senior management to remain with the company.
The bid appeared to provide a lift to the shares of several automotive components makers, with the Dow Jones U.S. auto parts index rising 0.9%.