CVR's board rejected Icahn's $30 tender, then returned capital anyway

In February 2012 Carl Icahn, with a 14.5% stake, launched a hostile $30-per-share tender offer for CVR Energy, valuing the refiner at about $2.6 billion.

The board, advised by Deutsche Bank and Wachtell Lipton, unanimously called the offer inadequate and adopted a shareholder rights plan; on February 13 it declared a regular dividend and authorized selling part of its CVR Partners stake to fund a special dividend.

Under pressure from the offer's conditions and the rights plan, the board later stopped fighting and let shareholders decide, while Icahn's tender proceeded.

Icahn's offer ended with him controlling about 69% of CVR, roughly 80% after the follow-on period; shortly afterward CVR paid a $5.50-per-share special dividend.

CVR committed to sell part of CVR Partners to fund a special dividend; after Icahn took control, a $5.50 special dividend followed, netting him about $392 million.

The board's rejection forced a public valuation debate.

Committing to a special dividend answered Icahn's 'what would you do' challenge.

The rights plan slowed Icahn's accumulation even though it did not stop him.

Selling CVR Partners units raised cash without selling the whole company.

Rejecting a hostile bid is only half a strategy: a board must also answer 'what would you do instead' - CVR's capital-return plan became the floor for what eventually happened.

CVR stayed public under Icahn's control and later paid two more special dividends of $6.50 and $2 per share plus regular quarterly payouts. The capital-return program the original board had put on the table became the company's lasting answer to its critics.