Icahn the New King Lear?

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Icahn is making a play for Lear, but coming between the dragon and his (inevitable) wrath is reality. Lear Corp (NYSE: LEA) is up almost 12% (over $4.00) in today’s trading after Carl Icahn presented an offer to grab Lear on the cheap at $36/share or $2.75bn. Compared to some of the corporate car accidents in the auto industry, Lear is remaining afloat, with flat to slightly down revenue growth, half a billion dollars in cash on the balance sheet, and net leverage of 2.9x. It’s pretty much nestled in the middle of many industry peers, and trades as such, at 6.7x EV/EBITDA, which is almost a 50% premium to a flailing company like Visteon and a 45% discount to an outperformer like Johnson Controls. Icahn’s initial lowball bid is not unexpected, however, as Lear is experiencing below average revenue growth compared to its peers and much thinner gross and operating margins. Lear may be a good turnaround prospect, with decently positive EBITDA-Capex, a potential upside in a relatively high projected PEG ratio compared to its peers, and relatively high yielding equity for auto with a 2.9% dividend yield. Icahn is likely to speak again, as his initial bid of almost nothing, will most likely come to nothing.
Icahn Affiliate Makes Offer To Buy Lear for $2.75 Billion – [WSJ]

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