Carl Icahn scores $757 million profit after American Railcar announces merger

  • American Railcar agrees to merge with an ITE Rail Fund subsidiary for $70 a share.
  • Icahn owned 62.2 percent of American Railcar's shares outstanding as of June 30, according to FactSet.
  • Icahn Enterprises says its profit from its 8-year-old stake was $757.2 million, including the deal.
Carl Icahn speaking at Delivering Alpha in New York on Sept. 13, 2016.
David A. Grogan | CNBC
Carl Icahn speaking at Delivering Alpha in New York on Sept. 13, 2016.

Activist investor Carl Icahn scored a big payday on Monday after shares of tanker car maker American Railcar Industries surged on news that the company will merge with a subsidiary of ITE Rail Fund.

Icahn owned 62.2 percent of American Railcar's shares outstanding as of June 30, according to FactSet, having first taken a majority stake in 2010. The stake was worth nearly $550 million through Friday's close. In a statement Monday, Icahn Enterprises said its investment in American Railcar has resulted in a profit of $757.2 million, including the deal.

American Railcar agreed to merge with the ITE subsidiary for $70 a share. The deal is valued at $1.75 billion, including debt. American Railcar's stock shot up 50 percent in trading on the news, to $69.75.

Monday's jump adds to what has already been a good year for American Railcar shares. Through Friday's close, the stock was up 11.2 percent. It is also up 17.8 percent in the past 12 months.

Both companies said the deal is expected to close this quarter.

"The sale demonstrates the value this company, its employees and shareholders have created," said American Railcar CEO John O'Bryan said in a statement. "We look forward to working with the ITE team to continue to improve our business and grow in the years to come."

O'Bryan also thanked Icahn Enterprises "for its support and guidance over the years."