Thread: Icahn Challenges Oshkosh Board
12-22-2011, 06:30 PM #1
- Join Date
- Jun 2006
- Chicago Area
Icahn Challenges Oshkosh Board
(Reuters) - Oshkosh Corp (OSK.N) has sent a proxy card to shareholders recommending they ignore an effort by billionaire investor Carl Icahn to install his own board members as he pushes for a merger with one of the company's key rivals.
Icahn recently nominated six associates to be on the board of the Wisconsin maker of trucks, construction lifts and defense vehicles. In a letter to the company's shareholders last week asking for support for his nominations, he also voiced strong support of a merger between Oshkosh and Navistar International Corp (NAV.N).
Icahn owns nearly 10 percent stakes in both companies. Oshkosh shareholders will weigh in on the battle between Icahn and the company's management and board at the January 27 annual meeting in Oshkosh.
In a proxy card sent to shareholders and signed by Oshkosh Chief Executive Charles Szews, the company said "your board and management team are successfully executing Oshkosh's strategy to position the company for the future and create value for all shareholders."
In the following pages, the company repeated its operating strategy and laid out several metrics that indicate recent success in the business.
The proxy card was dated December 20 and filed with the Securities and Exchange Commission on Wednesday.
Oskhosh's outreach to shareholders contrasts the message coming from Navistar management, which has lent vocal support to a collaboration with Oshkosh. Navistar - bigger than Oshkosh in terms of revenue and market capitalization - has said it sees potential synergies with its rival in the defense and commercial truck sectors.
Navistar Chief Executive Dan Ustian also said on Tuesday during the company's fourth-quarter earnings call that he sees opportunities to supply Oshkosh with engines for trucks and other key truck components.
Navistar shares surged on Tuesday as the company's results exceeded expectations, but gave back most of those gains on Wednesday as the stock fell 5.2 percent to close at $36.90. Oshkosh shares traded up slightly on Wednesday after a strong Tuesday performance, closing at $21.99.
Oshkosh is not the only party to raise questions about Icahn's strategy. Earlier in the week, Owl Creek Asset Management founder Jeffrey Altman filed a disclosure saying he had "concerns" about a merger. Altman said Navistar needs to "demonstrate the ability to derive significant value from synergies."
Icahn's own overture to Oshkosh shareholders indicates the investor strongly supports a merger.
"The Icahn Parties believe there may be significant synergies between Oshkosh and Navistar International Corporation and that shareholders of both companies could benefit from these synergies and the Icahn Parties would be supportive of a merger," the letter said.
"The Icahn Parties believe that synergy driven consolidation will be a primary method for defense contractors to drive earnings and cost savings in the years ahead."
(Reporting By John D. Stoll; editing by Andre Grenon)
A name familiar to fire truck manufacturers on the list of Icahn's picks for the Oshkosh Board is Marc Gustafson, formerly of American LaFrance and E-One.
And is it any coincidence that Jim Heebe is now at Navistar?
Could this be the (fill in the blank)?
Holy crap! I hear the fat lady singing!
12-23-2011, 01:55 AM #2
- Join Date
- Aug 2009
Anf the leaders are the finest of men
We elect them again and again.
Corporate hacks are like black mold, once they get in the only thing to do is abandon the structure.
12-23-2011, 05:05 PM #3
12-23-2011, 08:11 PM #4
- Join Date
- Aug 2001
With only a 10% stake, I doubt that he can do much other than raise a stink. At least I hope......
12-26-2011, 03:22 PM #5
- Join Date
- Aug 2005
The only thing i can say having worked under Marc Gustafson is poor Pierce!
01-12-2012, 09:50 AM #6
- Join Date
- Jun 2002
Here is a letter from Icahn dated January 6th to OTC stockholders. This could get interesting.
Jan. 6, 2012, 9:27 a.m. EST
Carl Icahn Issues Open Letter to Shareholders of Oshkosh Corporation
NEW YORK, Jan. 6, 2012 /PRNewswire via COMTEX/ -- Carl Icahn today issued the following open letter to shareholders of Oshkosh Corporation:
Dear Fellow Oshkosh Shareholders,
The Oshkosh Annual Meeting will take placeFriday, January 27, 2012. Your vote is important as Oshkosh is at a critical juncture and I believe that my six director nominees have the necessary skills, experience and objectivity to help fix the problems at Oshkosh. I think change is necessary and crucial for the future success of Oshkosh.
In a recent letter from the Oshkosh Chairman and from the CEO, the company argues that they should be supported due to a 3-year total shareholder return of 45%. I find this to be absurd since during this time period the total enterprise value of Oshkosh decreased by approximately $500 million, from $3.1 billion to $2.6 billion.
Additionally, I am not sure why this management team feels that their past stock performance is an attribute for which they are owed loyalty, considering Oshkosh was trading at $35 per share at the start of 2011 and now trades in the low $20s. The company is also one of the worst performing among its peers in terms of stock performance over the past five years, and the worst in terms of 2012 projected earnings growth.
The board feels that it is useful to list all of the actions they have taken "In the face of unprecedented market challenges" without mentioning their current dire situation in terms of falling profitability and low share price. They have curiously focused on items that are old news such as:
"Achieved the #1 or #2 brands in virtually all of its markets" - though this has not changed for years and was primarily accomplished by acquisitions.
"Developed innovative, profitable products like the M-ATV" - which is now at the end of its production cycle.
"Reduced debt by approximately $2 billion" - We believe this debt never should have been incurred in the first place. It was used to fund the acquisition of a company whose earnings subsequently went to zero. Management then had to seek waivers under this debt to avoid a potentially disastrous default. Management is now asking for shareholders to be grateful that they have paid down this debt.
"Cut approximately $200 million in costs in fiscal 2009" - IT IS NOW FISCAL 2012.
I believe this is one of the major problems with the incumbent management and board; they are congratulating themselves for actions taken in the past rather than addressing challenges the company faces in the present and future.
The board has suggested that I confirmed at a meeting with management that I do not understand the defense business. This only confirms my belief that they did not understand me in the first place. Irrespective of any apparent miscommunication, there is one thing I do understand about the defense business - defense contractors should charge their customers a price in excess of their cost which is a concept that seems to me to be lost on the Oshkosh board and management given the recent experience with the FMTV contract.
The board is also alleging that I have provided no substantive ideas to enhance shareholder value. After reviewing the details surrounding the MOVE strategy, I firmly believe that their strategy provides no substantive ideas to proactively enhance shareholder value. To put it differently, I believe that their strategy represents the same "wait and see" approach to a recovery which the board has been implementing for years. Shareholders deserve a real plan to deliver value TODAY centered on the following:
Immediately explore alternatives for JLG to reallocate capital to debt reduction, returning capital to shareholders and providing opportunities to pursue a more active acquisition strategy surrounding core businesses.
Capitalize on a weak economy by consolidating existing niche businesses and entering new synergistic product lines rather than waiting to see how the economy progresses.
Aggressively seek small acquisitions and joint venture opportunities in core product areas to develop a comprehensive international growth strategy.
Position the company to participate in coming defense industry consolidation as both a buyer and/or a seller.
Integrate and restructure existing operations to maintain profitability, and if the current management is not willing or capable of executing such a restructuring, finding a management team that will.
I believe that my nominees have excellent operational and financial qualifications and that their experience would be extremely beneficial to Oshkosh and its shareholders to move this company to develop a value enhancing strategy.
I urge shareholders to vote the GOLD card for Alapont, Gustafson, Intrieri, Krongard, Merksamer and Ninivaggi to send a message to the company and deliver the necessary change to take Oshkosh into the future. If you have already voted the white card, you can still change your vote by now voting the GOLD card.
Carl C. Icahn
01-12-2012, 01:59 PM #7
- Join Date
- Jul 1999
- Rural Wisconsin, Retired from the burbs of Milwaukee
Corporate vultures never lose, if they make money it is great, if they lose money it is a huge right off for tax breaks, so it is great also. The end result is the companies mean absolutely nothing and the employees are little more than pawns on a chess board.
It is sad to see how far this country and business has fallen...Crazy, but that's how it goes
Millions of people living as foes
Maybe it's not too late
To learn how to love, and forget how to hate
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