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Icahn Seeks to Topple Board at Southwest Gas, Name 10 Directors

(Bloomberg) — Activist investor Carl Icahn plans to nominate 10 directors at Southwest Gas Holdings Inc. on Monday in an attempt to replace the entire board.

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The billionaire investor, who owns a 4.9% stake in Southwest Gas, has been waging a battle at the Las Vegas utility after its announced deal to acquire the pipeline company Questar last month.

Icahn has criticized management for the purchase, arguing it overpaid for the asset. He’s been particularly critical of the roughly $1 billion in equity Southwest Gas said it plans to issue to help finance the $1.97 billion deal because of the dilution it will have on existing shareholders. He has also offered to buy the remaining shares in Southwest Gas he doesn’t already own for $75 a share, or finance the equity issuance himself.

The investor’s efforts so far have been rebuffed by the board he is now seeking to replace, and a representative for Southwest Gas wasn’t immediately available for comment Sunday. The company’s shares fell 2.2% last week to close at $69.57 on Friday, the first drop in five weeks.

Icahn called his nominees a “blue-ribbon slate of directors” and noted that eight of them were independent of his Icahn Enterprises.

“They are immensely qualified in terms of utility and regulatory experience and reflect a diverse mix of operational, financial, legal, regulatory and governance experts,” Icahn said in a statement. “We believe our slate of directors can greatly enhance stockholder and ratepayer value.”

Icahn’s nominees are former Federal Energy Regulatory commissioner Nora Mead Brownell, Marcie Edwards, Andrew Evans, H. Russell Frisby, Walter Higgins, Rina Joshi, Henry Linginfelter, and Ruby Sharma. Jesse Lynn and Andrew Teno from Icahn Enterprises round out the slate.

Lynn and Teno said the slate of nominees will be tasked with repairing the company’s strained relationship with regulators, ratepayers, stockholders and other constituents. They said their focus would be on reining in the “egregious” spending at the company under Chief Executive Officer John Hester.

“We believe the slate we have assembled is up to those challenges and even includes more than a few individuals who would make excellent CEOs of any utility in this country,” the pair said. “We look forward to introducing our nominees over the coming weeks.”

Southwest Gas said last week it planned to appoint two new directors and replace its chairman with current board member Robert Boughner at its annual general meeting. It also said it would consider selling a stake in its construction business, Centuri Group Inc., to help financing the Questar deal.

Icahn threatened legal action last week if the company issued equity for less than he has offered to acquire the company. He also said he would support the sale of a 19.9% stake in Centuri for $500 million.

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