Navistar and Icahn fight over CEO switch
Icahn to Navistar's board: "It is therefore outrageous that you have not reached out to obtain our opinion on issues such as choosing a new management team to lead this company."
(Reuters) -- Navistar International Corp. defended itself today against activist investor Carl Icahn, who had said the U.S. truck and engine maker's August hiring of a new CEO was ill-advised.
The company accused Icahn of engaging in "threats, attacks and disruptions" after he made his criticisms public on Sunday.
Icahn, Navistar's third-largest shareholder, said the truckmaker had not discussed the CEO switch with his firm, and he called the hiring of former Textron CEO Lewis Campbell a "worse-than ill-advised move."
The company, which makes International-brand heavy trucks as well as school buses and recreational vehicles, dismissed Icahn's complaint.
"Navistar maintains an ongoing dialogue with its shareholders and appreciates their input and views," the company said. "After a year of dialogue, we are extremely disappointed that Mr. Icahn has chosen to pursue his unproductive tactics of threats, attacks, and disruption."
Campbell, who replaced ousted Navistar CEO Daniel Ustian on Aug. 27, held his first major conference call with shareholders last Thursday, saying the Lisle, Ill.-based company was starting a cost-cutting campaign and would consider selling smaller parts of its business and it looks to return to long-term profitability.
"Campbell showed broad, early knowledge of company structure, direction, and improvements needed for Navistar turnaround," R.W. Baird analyst David Leiker said. "He voiced confidence in ability to execute objectives and exudes a sense of urgency within the organization."
Investors welcomed his words, sending the shares up nearly 20 percent on a day the company said it would have lost $100 million in the latest quarter without a one-time gain related to its tax rate.
The shares today fell 1.6 percent at $24.37 in mid-day New York Stock Exchange trading.
Icahn, who owns a 14.5 percent stake in the company, slammed Navistar's directors in an open letter to the board released late on Sunday.
"It is therefore outrageous that you have not reached out to obtain our opinion (and I assume you have not obtained the opinions of the other large holders) on issues such as choosing a new management team to lead this company," Icahn wrote.
Navistar has drawn the attention of activist investors over the past year as the company tried and failed to win U.S. regulatory approval for a new style of diesel engine. It said in August that it would drop that effort and instead begin buying engines from Cummins Inc.
Even with their gains since Campbell's arrival, Navistar shares remain down 37 percent over the past 52 weeks.
MHR Fund Management, an activist fund run by former Icahn adviser Mark Rachesky, has amassed a 14.99 percent stake in the company, just below the 15 percent level that would trigger the poison pill defense that the Navistar board adopted in June.
A spokesman for MHR declined to comment.
Navistar's largest shareholder is Franklin Resources Inc., which has a 16.3 percent stake it amassed before the company adopted its poison-pill defense. Franklin Resources officials were not immediately available for comment.
Icahn pushed last year for a merger between Navistar and rival Oshkosh Corp., but Oshkosh shareholders voted down an Icahn-backed slate of directors in January.Contact Automotive News