Jul. 31–Still enjoying the thrill of the hunt, legendary corporate raider Carl Icahn has a Dallas-based real estate company in his cross hairs.<\/p>\n
Mr. Icahn unveiled his intent to take over Dallas-based Hallwood Realty Partners LP on March 3, with the announcement that his High River LP affiliate had acquired nearly 15 percent of the company from Gotham Partners LP, a New York-based hedge fund.<\/p>\n
On Tuesday, Mr. Icahn, after having extended the tender offer until Aug. 8, upped the bid for the units to about $132.50, about 87 percent over the original price he paid to Gotham.<\/p>\n
On Wednesday, Hallwood acknowledged the furor surrounding the increased bid, but said that it had not been formally approached by Mr. Icahn.<\/p>\n
Hallwood shares rose 16 percent Wednesday to $127. Trading had been halted Tuesday afternoon before the announcement.<\/p>\n
Hallwood, a unit of Hallwood Group Inc., owned 14 real estate properties in six states containing 5.2 million square feet of office and commercial space as of Dec. 31.<\/p>\n
In April, Mr. Icahn launched a tender offer of $100 for every remaining outstanding unit of Hallwood Realty, a 40 percent premium over the average closing price of the units in the 60 days leading up to the purchase of the units from Gotham.<\/p>\n
Hallwood’s board responded that it had no desire to become one of Mr. Icahn’s trophies, at least not at the proposed price.<\/p>\n
The board said May 14: “Having completed its review, in consultation with its outside adviser, Morgan Stanley, the board has concluded that the offer is inadequate and unanimously recommends that unit holders of the partnership not tender their units in the offer.”<\/p>\n
Those who know Mr. Icahn say his adrenaline surges at the first hint of a challenge.<\/p>\n
Mr. Icahn has never taken a business course. Born in 1936, in the depths of the Depression, he studied philosophy at Princeton University and was a champion chess player. He may be best known for the major battles he waged against Texaco Inc., which landed the energy giant in bankruptcy court in 1987, and the former Trans World Airlines, which suffered the same fate.<\/p>\n
“What makes Carl tick is a desire to win. He likes to identify an opportunity and be victorious,” said Mark Stevens, who spent a lot of time with Mr. Icahn in writing King Icahn: The Biography of a Renegade Capitalist. “Business is like a big chess game to him. And this is just another part of his commercial chess game.”<\/p>\n
Unit holders have taken the advice of Hallwood’s board of directors. On June 27, Mr. Icahn announced that the expiration date for his tender offer had been extended until Aug. 8. Only 38,563 units had been tendered at that point, representing 2 percent of the outstanding float.<\/p>\n
Hallwood, though, had a contingency plan of its own. On July 24, the partnership stated before the Court of Chancery of Delaware that the company was being put up for sale. Hallwood, in effect, was stepping down from its defensive posture and inviting suitors to up Mr. Icahn’s bid. Tuesday’s boost in the unit price seems to have confirmed that strategy.<\/p>\n
Although Mr. Stevens stressed that he knows nothing of the particulars of the Hallwood offer, he said he was sure that Mr. Icahn knows what he is doing, especially in the real estate arena, where Hallwood would add to his existing portfolio.<\/p>\n
“Carl looks for asset valuation, so he would like real estate, because there’s a hard asset there,” Mr. Stevens said. “You’re not going to sell him an intangible like something on the Internet.”<\/p>\n
Even at the new price of $132.50, Mr. Icahn apparently believes he is getting a bargain. His High River group said Monday that it might consider paying an even higher price if it’s allowed to review Hallwood’s books.<\/p>\n
For now, Hallwood has no comment on the latest development other than to recommend that unit holders take no action. If the offer is formalized, the company said, it would uphold its fiduciary responsibility to thoroughly examine the offer.<\/p>\n
Roy Winnick, a spokesman for Hallwood, said he “could not comment on a hypothetical situation.” Mr. Icahn did not return a phone call requesting comment.<\/p>\n
It’s Mr. Icahn’s move. Mr. Stevens says his bet is that the legend will prevail.<\/p>\n
“Carl is always three moves ahead of his strongest adversary,” Mr. Stevens said.<\/p>\n
After so long in the game, what does Mr. Icahn want?<\/p>\n
“More,” Mr. Stevens said, “and he usually gets it.”<\/p>\n
—–<\/p>\n
To see more of The Dallas Morning News, or to subscribe to the newspaper, go to http:\/\/www.dallasnews.com.<\/p>\n
(c) 2003, The Dallas Morning News. Distributed by Knight Ridder\/Tribune Business News.<\/p>\n
PO HRY,<\/p>\n","protected":false},"excerpt":{"rendered":"
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