Dan River Inc. today said that its board of directors unanimously rejected a tender offer for control of the company by Icahn Capital Corp.
A week ago, Carl C. Icahn, who already owns 15 percent of Dan River, offered to buy 3.1 million shares, or 54 percent of Dan River, for $18 a share. The offer required the company to abandon litigation against Icahn and not to make any transactions to block the offer.
The Danville, Va., textile company said that its board on Thursday authorized management to "to take whatever further steps it deems necessary to protect the interest of the company and its stockholders, including continuation of existing litigation and the commencement of proceedings to enjoin the Icahn offer."
A spokesman at Icahn Capital here said that the company will reply to Dan River next week.
Analysts say that Icahn rarely seeks to run companies. In the past, Icahn has sought to use his shares to get a seat on the target corporation's board of directors. He often will seek out a merger partner for the company, or the target company will buy back his stock at a premium over what he paid for it just to get rid of him.
One Wall Street analyst, noting that Dan River would seem to have no particular reason to favor the $18 offer, says he suspects it was made by Icahn to attract a buyer for the stock his group already owns.
"He's trying to stir up an offer for Dan River, trying to learn if there are any white knights in the woods who will come to the company's rescue," says the analyst. A "white knight" is a company that merges with another company to save it from a takeover by a less desirable partner.
Icahn said last week that, if Dan River did not accept the terms of his $18 a share offer, his group still planned to offer $15 a share for 700,000 shares, or 12 percent of the company's outstanding stock.