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Greenbrier shares fall on rejection of Icahn offer

NEW YORK (AP) -- Shares of Greenbrier Cos. tumbled more than 10 percent Friday after the company rejected a sweetened buyout offer from Carl Icahn's American Railcar.

THE SPARK: Lake Oswego, Ore., company said late Thursday American Railcar's boosted offer of $22 per share, which values the company about $596.1 million, is unacceptable and not in the best interests of its shareholders.

THE BIG PICTURE: Icahn is known for buying into struggling companies and shaking them up, with mixed results. He holds a controlling stake in American Railcar Industries Inc., which he tried unsuccessfully to combine with Greenbrier in 2008.

Earlier this year, Icahn bought a 9.99 percent stake in Greenbrier. Earlier this week, American Railcar offered $20 per share for Greenbrier, valuing it at about $488 million. That offer also was rejected by Greenbrier, which said late Tuesday that it grossly undervalued the company.

Greenbrier, based in Lake Oswego, Ore., said late Thursday that it still thinks that a combination of the two companies could be beneficial for both of them and their shareholders, but that it won't consider offers that undervalue Greenbrier or overvalue American Railcar.

THE ANALYSIS: Sterne Agee analyst Sal Vitale backed his "Neutral" rating and $16 price target for Greenbrier, noting that Icahn has said the $22 per share offer is a firm one and that he will drop his bid if it isn't accepted. At the same time, Vitale said he doesn't expect Greenbrier to change its mind and accept the offer after saying that it grossly undervalued the company.

Vitale added that it's unlike there will be other suitors for Greenbrier, which will probably send its shares back down to his $16 price target, which is where they were before Icahn made his offer.

THE SHARES: Down $1.95, or 11 percent, to $16.21 in heavy afternoon trading, after dropping as low as $16.09 earlier in the day. Over the past 52 weeks, the company's shares have traded between $13.10 and $26.26.