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CVR Deal Sweetens Icahn’s Lucrative Buy

Icahn should nearly double his CVI buy-in after CVRR spinoff


Carl Icahn shelled out $2 billion for an 82% stake in CVR Energy (NYSE:CVI) last year, and it has been money well spent. Since then, the company has returned almost 90% — and Icahn will be adding to his gains today by taking its CVR Refining (NYSE:CVRR) division public.

The deal will involve the issuance of 20 million shares at a range of $24 to $26. The lead underwriters include Credit Suisse (NYSE:CS), Citigroup (NYSE:C), Barclays (NYSE:BCS), UBS Securities (NYSE:UBS) and Jefferies (NYSE:JEF).

CVR Refining, an operator of two refineries in Coffeyville, Kan., and Wynnewood, Okla., has benefited from a decline in crude prices, which has expanded margins. CVR Refining is structured as a master limited partnership to reduce the tax bite for cash distributions to shareholders, and it is expected to pay out a juicy yield of 19%.

Icahn also says he will purchase as much as $100 million of CVR Refining at its IPO — he might see more potential than just the spinoff proceeds … or it might just be a smart way of stoking demand for the deal.

Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook” and “High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders.” Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

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