UPDATE: Icahn Makes Hostile $2.6 Billion Bid For CVR Energy

Activist investor Carl Icahn Thursday unleashed a hostile takeover bid worth at least $2.6 billion for CVR Energy Inc. (CVI), ramping up pressure on the company to put itself on the block.

Shares closed up 5.8% at $29.20 in regular trading, near Icahn's offer of $30 a share--an 8.7% premium to Wednesday's close. The stock is up nearly 58% this year.

Icahn--who said CVR's current share price undervalues the energy company--said he would get a board elected that would put the company up for sale if he gains control.

The bid came a few months after Icahn pulled back from a similar effort to force a sale by Clorox Co. (CLX), a cleaning-products company.

CVR Energy shareholders also would receive a contingent-value right that would entitle them to an additional payment if the company is sold for more than the $30 a share, corresponding to the amount over that level.

Icahn, who recently disclosed a large stake in the Texas-based company, said the refiner is worth at least $37 a share, bringing its market capitalization to $3.25 billion. According to Icahn, rivals such as Western Refining Inc. (WNR), Valero Energy Corp. (VLO) and Marathon Petroleum Corp. (MPC) would be interested in CVR Energy's refineries.

The move also came amid a major shift in the U.S. refining industry, in which booming production of crude oil in North Dakota, West Texas and the Rockies is creating a glut due to a lack of pipeline capacity to take the oil to large refining centers in the Gulf Coast and the East Coast. But refiners in the U.S. interior--including CVR Energy--are living a bonanza because they have access to all this new cheap crude oil, which they can convert into gasoline and diesel more profitably than their coastal competitors. The West Texas Intermediate, or WTI, crude oil in the interior U.S. sells at a discount of $18 a barrel versus the Brent crude oil-indexed oil sold in the Gulf Coast; Icahn said that spread was unrecognized in CVR Energy's stock price.

CVR is a relatively small refiner. Its two facilities in Kansas and Oklahoma have a combined capacity of 180,000 barrels a day. CVR reported third-quarter refining margins of $33.92 a barrel, up from $9.01 the year before, on the strength of favorable WTI prices in the quarter. The company reported overall earnings of $109 million during the quarter.

On Tuesday, Icahn had urged CVR Energy Chief Executive Jack Lipinski that the company should put itself up for sale instead of pursuing the "limited initiatives" that CVR had outlined a day earlier. These measures included a special dividend, funded by the sale of a stake in a limited partnership, as well as quarterly dividends totaling 8 cents a share.

Analysts said that Icahn's plan might pay off for shareholders. CVR would most likely have to sell its fertilizer-production assets to make it more attractive to potential suitors in the refinery industry, but selling CVR in pieces might bring "break-up value," said Sam Margolin, analyst at Global Hunter Securities.

"I think a lot of folks are going to consider it attractive," Margolin said.

CVR has already built itself some protection from Icahn, adopting a poison-pill defense that is triggered if any investor takes more than 15% of its stock. Icahn's 14.5% stake in the company makes him the largest holder, according to FactSet Research, with twice the size holding of David Tepper's Appaloosa Management.

Icahn also plans to nominate nine candidates to CVR Energy's board. He said that, if the current board puts CVR Energy up for sale before the tender offer expires in late March, then he reserves his right to withdraw the offer and planned proxy fight. The offer is conditioned on Icahn obtaining at least 35.76% of the company's outstanding shares as well as the election of his slate of board candidates, the elimination of the company's poison pill and some other conditions.

Icahn employed similar methods at Commercial Metals Co. (CMC) and Clorox, but stepped back when the offers failed to win enough support from shareholders.

On Tuesday, CEO Lipinski told Icahn he would take the suggestions under advisement and discuss them with his board.

A CVR spokesperson wasn't immediately available Thursday to comment on Icahn's bid.

-By Ben Lefebvre, Dow Jones Newswires; 713-547-9201;[e-mail]

--Tess Stynes and Angel Gonzalez contributed to this article.