Icahn raises the stakes in Lear buyout bid

The billionaire investor Carl Icahn has raised his bid for Lear, a U.S. auto parts maker, by 3.5 percent to $2.9 billion after opposition from stockholders and investor advisory firms.

Lear delayed a vote on the sale again, by four days, to July 16.

The board of Lear approved the amended agreement with Icahn's American Real Estate Partners, the auto supplier, based in Southfield, Michigan, said Monday. The revised offer is $37.25 a share, up from $36 a share, or the $2.8 billion in total, offered previously, Lear said. Icahn would also get a $25 million breakup fee if his proposal failed.

Icahn, the biggest shareholder in Lear, increased the payout after his previous bid was opposed for being too low by investors like Pzena Investment Management, the second-largest shareholder in Lear. The three advisory firms Institutional Shareholder Services, Proxy Governance and Glass Lewis also recommended that it be rejected.

"We've met and talked with a number of shareholders and, I think, addressed many of their concerns," Daniel Ninivaggi, the executive vice president and general counsel of Lear, said in an interview. "A good deal has become even better, and we expect broad shareholder support."

On June 22, Icahn said that he would not raise his bid for Lear after the advisory firms' recommendations. He said in an interview that day that Lear shareholders "might be doing me a favor" by rejecting the $36-a-share offer.

Icahn did not immediately return a phone call seeking comment.

The breakup fee in the revised proposal is $12.5 million in cash and 335,570 shares of Lear stock, valued at about $12.5 million. Icahn would also be allowed to own as much as 27 percent of the shares outstanding, rising from a current limit of 24 percent. His stake was 12 million shares, or almost 16 percent, as of May, according to data compiled by Bloomberg.

In afternoon trading, shares of Lear rose $1, or 2.79 percent, to $36.86 in New York. Shares of American Real Estate Partners, based in Mount Kisco, New York, added $1.83, or 1.78 percent, to $104.75.

Lear, one of the world's largest makers of auto seats, worked hard to get a better offer from Icahn, Ninivaggi said. Icahn requested the higher limit on his stake in the company as part of the revised deal, Ninivaggi said.

"I think he feels that if the transaction doesn't go through, he'd like the ability to remain a significant shareholder," Ninivaggi said.