Navistar Gives In to Icahn to Avoid Proxy Fight

by Christopher Freeburn | October 9, 2012 10:24 am

Struggling truck manufacturer Navistar International (NYSE:NAV[1]) has managed to prevent a proxy battle with activist investor Carl Icahn[2].

The company has replaced two members of its board, adding investor Mark Rachesky, who controls about 15% of Navistar shares, and Vincent Intrieri, who will represent Icahn. A third member, chosen by Icahn and Rachesky, will be added later, Bloomberg noted.

Navistar’s move came after Icahn, who owns 14.9% of Navistar shares, sent a letter to the board in September threatening a proxy fight in addition to a lawsuit if the company didn’t provide investors with four seats on its board.

Icahn has been sharply critical of Navistar’s management. The company has posted $241 million in losses so far this year, while its shares have fallen 40%. In August, former CEO Dan Ustian stepped down after the company abandoned a long-running effort to get government approval for a new engine.

In June, Navistar’s board approved a “poison pill” strategy to defend against a potential takeover.

The three boards seats appear to have at least temporarily mollified Icahn, who issued a statement applauding the decision and pledging to work with the board to increase the company’s value.

Shares of Navistar fell fractionally in Tuesday morning trading.

Endnotes:
  1. NAV: http://studio-5.financialcontent.com/investplace/quote?Symbol=NAV
  2. prevent a proxy battle with activist investor Carl Icahn: http://www.washingtonpost.com/business/navistar-concedes-board-seats-to-icahn-rachesky-chicago-mover/2012/10/08/34d02b62-1187-11e2-9a39-1f5a7f6fe945_story.html

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