Carl Icahn speaking at Delivering Alpha on September 13, 2016 in New York.
David A. Grogan | CNBC
Carl Icahn announced a major stake in Southwest Gas on Tuesday, and the active investor is prompting the Las Vegas-based utility company to abandon its rumored acquisition of natural gas company Questar Pipeline.
“During the past few years, SWX’s management has made several serious errors at the expense of shareholders. However, there have been rumors about purchasing Questar at a price you are willing to pay, which all of the previous errors have been spurred on. In comparison, Icahn wrote in a letter to Southwest’s board of directors. made public on Tuesday. “The purchase will result in a serious reduction in shareholder value.”
Shares of Southwest climbed more than 7% in afternoon trading on Tuesday. In his letter, Icahn said that the gas company did not respond to his inquiries on the matter.
Southwest did not immediately respond to CNBC’s request for comment.
Icahn’s letter came after Reuters reported that Southwest Questar was in advanced talks to buy Dominion Energy’s transportation and storage business.
Warren Buffett’s Berkshire Hathaway was going after Questar last year, but the deal was terminated in July “due to uncertainty associated with obtaining approval from the Federal Trade Commission.”
In a letter to Southwest’s board, Icahn said he is “extremely disappointed” with management’s performance as “a large shareholder” over the years. He cited “weak ties with regulators,” runaway spending and a weak credit profile.
Enjoyed this article?
For exclusive stock picks, investment ideas and CNBC global livestreams
sign up for CNBC Pro
Start Your Free Trial Now