WCI Board Rips Icahn Bid,
Hints at Rival Offers

Carl Icahn's bid to buy WCI Communities Inc. seemed a brassy bet on Florida's troubled high-end condominium market. But the home builder's board now suggests it wasn't brassy enough.

WCI directors yesterday urged shareholders of the Bonita Springs, Fla., home builder to reject the billionaire investor's $22-per-share tender offer for the struggling builder that specializes in building high-rise condos on the state's coastline.

As of 4 p.m. composite trading on the New York Stock Exchange, WCI was at $21.60, up 15 cents. In after-hours trading, WCI was quoted at $21.99, up 39 cents.

In branding Mr. Icahn's offer inadequate, the board suggested other offers were in the offing. "Credible potential buyers have shown interest in the company" through its financial adviser, Goldman Sachs Group Inc., WCI Chairman Don Ackerman said in an interview.

But some analysts expressed surprise at the board's recommendation. "Icahn is the best thing that has ever happened to WCI," said Alex Barron, an analyst at JMP Securities who has the equivalent of a sell rating on the stock. He added there may be other buyers interested in WCI, but probably "at a much lower price."

The WCI board said late yesterday that Mr. Icahn's offer of $22 a share "does not recognize the value of the company's extensive and well-positioned real estate assets" nor its brand.

The board added in a statement that it has started "a comprehensive sale process with the assistance of Goldman Sachs" and believes other offers or alternatives to Mr. Icahn's offer "may emerge that provide shareholders with greater value than $22 a share."

Mr. Icahn wasn't available for comment. The company scheduled its annual shareholder meeting for June 15.

Some analysts believe Mr. Icahn's offer may go unmatched because of fears of a worsening in Florida's condo market. The force of the state's condo glut is still unfolding. In the fourth quarter, WCI had more defaults on condos and cancellations of typical single-family homes, which it also builds, than it received orders for new homes.

WCI criticized the offer by Mr. Icahn, who has put up a slate of candidates for the board, as being "structurally coercive." His tender offer, which would value the company at about $920 million, is conditioned on the WCI board pulling its recently enacted "poison pill" provision intended to ward off hostile takeovers.

The tender offer came at a crucial time for WCI, as it prepares to open about 10 condo developments across Florida this year and collect cash from buyers, who put down deposits on units several years ago.

Some analysts warn that a souring housing market raises the risk that many WCI buyers will walk away from their deposits and leave WCI with a glut of homes to resell.

WCI, which has a market value of about $903 million, needs cash from condo closings to pay down its debt. The company may also be able to generate cash by selling some of its undeveloped land.

JMP Securities' Mr. Barron said this is why Mr. Icahn was WCI's best bet. "He is willing to take on all risk of the condos closing and paying down the debt," Mr. Barron said.

-- Christopher Hinton contributed to this article.

Email your comments to rjeditor@dowjones.com.