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Icahn Seeks Shelter in Hotel Chain

Date: Wednesday, December 7, 2005
Author: Hedgeworld.com

By Christopher Faille, Financial Correspondent
Wednesday, December 07, 2005 4:31:47 PM ET

TORONTO (HedgeWorld.com)—Fairmont Hotels & Resorts Inc., a luxury lodging chain, said that it would strongly oppose the tender offer and takeover bid planned by Icahn Partners LP and Icahn Master Fund LP, affiliates of Carl C. Icahn.

Mr. Icahn announced in a statement Dec. 2 that he plans to offer US$40 per share for more than 29 million of the common shares of Fairmont, which together with the equity he already controls will give him approximately 51% of the outstanding shares.

The offer represented only a small premium over the pre-announcement market price, although that price was itself the result of a run-up in the weeks since Mr. Icahn announced his acquisition of more than 9% of Fairmont shares on Nov. 7. The closing price, Nov. 4, the last trading day before that announcement, was US$35.13.

This week, Fairmont's price has risen above the proposed tender, raising the possibility that the market may believe that an auction has just begun.

Mr. Icahn's spokesman, David Schechter, said Wednesday, Dec. 7, that there would be a formal offer quite soon, certainly by the end of the year. He said that under the circumstances, Mr. Icahn and his camp wouldn't be able to make any further comment beyond their statements and filings.

Fairmont, likewise, declined to comment beyond public statements. Those statements have described Mr. Icahn's offer as "coercive by its very nature." They've quoted William R. Fatt, chief executive of Fairmont, "If and when an actual takeover bid is commenced, Fairmont's Board of Directors will make a formal recommendation to shareholders promptly."

It is Mr. Icahn's position that Fairmont and its shareholders would benefit if the company were acquired by another, better able to take advantage of the economies of scale in the business. "To the extent that Fairmont is willing to pursue this path, the offerors would be willing to enter into discussions to extend the length of this Offer to accommodate a sale process," the Icahn group's statement said.