Icahn to Commence Proxy Contest, Tender Offer for Southwest Gas

Billionaire investor Carl Icahn, seen in 2015, is challenging proposed moves by Southwest Gas Holdings Inc., not the first time he has agitated at a utility.



Photo:

Victor J. Blue/Bloomberg

Billionaire investor

Carl Icahn

escalated his challenge to

Southwest Gas

SWX 7.04%

Holdings Inc. by offering to buy shares of the Nevada utility and announcing plans to try to replace the company’s board.

Mr. Icahn has challenged Southwest Gas’s proposed roughly $2 billion acquisition of Questar Pipeline Co. from

Dominion Energy Inc.

D 0.38%

He argues the deal for the natural-gas pipeline company that provides transportation and storage service would diminish shareholder value.

On Thursday, Mr. Icahn published a letter seeking support from other Southwest shareholders and offering to buy shares at $75 each. “We fear the Questar deal can be explained only by management’s desire to empire build and entrench themselves,” he wrote.

Southwest Gas shares closed 7% higher on Thursday at $69.49.

A call to Southwest wasn’t immediately returned. In a letter to Mr. Icahn published Wednesday, Southwest said that the Questar deal was priced fairly and would contribute to its earnings starting next year. It also defended its returns and management practices.

Mr. Icahn said in the letter that his

Icahn Enterprises

LP plans to launch a proxy contest to replace the Southwest Gas board along with a tender offer for $75 a share. The tender offer would be conditioned, including on the elimination of a recently announced poison pill, according to the letter.

If a third party makes a higher bid, the letter said, “We intend to either raise our bid or support that higher bid.”

Warren Buffett’s Berkshire Hathaway Inc.

had agreed to buy Questar for around $1.7 billion including debt. The parties abandoned the deal in July because of uncertainty over whether it would be cleared by regulators. Dominion said at the time it intended to sell Questar by the end of the year.

Mr. Icahn has agitated at other utilities, including

FirstEnergy Corp.

earlier this year. He now holds seats on the Ohio utility’s board.

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