SWX Southwest Gas Holdings Inc

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Pursuant to § 240.14a-12

No fee required.

Fee paid previously with preliminary materials.

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

SWX False Statement: “Your Board and management team have taken decisive action to deliver stockholder value”

THE TRUTH: SWX’s board and management team have pursued a value-destructive acquisition spree, paying top dollar for assets to empire build and entrench and enrich themselves. Their financing mechanisms have been reckless. Rarely do utilities pursue $855 million acquisitions of non-regulated assets financed entirely with debt. Rarely do companies finance with 100% short-term debt an acquisition that represents ~50% of their own company’s market capitalization – thus putting themselves in the untenable position of being forced to issue significant equity at some uncertain date and uncertain price without a stockholder vote. Many would call these activities “grossly negligent.”

SWX False Statement: “Mr. Icahn is intent on capturing the value of Southwest Gas for himself, and no one else.”

THE TRUTH: We believe strongly in the potential of Southwest Gas under a new board of directors. That is why we have launched a tender offer to buy any and all shares of SWX at $82.50 per share. The tender is there for those who wish to decide for themselves whether $82.50 is an attractive premium compared to the $64.92 closing price on the day prior to our initial tender offer. The tender offer is a choice. If you believe in the long-term value creation plan (like we do) you are welcome to hold your shares and participate alongside us as our nominees to the SWX board of directors generate long-term value. We welcome the opportunity to partner with you as we have in many other companies.

SWX False Statement: “The fact that MountainWest was not managed as a core asset under prior ownership also presented an opportunity for us to unlock further value through focused management as a core strategic component of Southwest Gas”

THE TRUTH: How ironic is it that SWX’s directors want to have “focused management” of a non-core asset that SWX did not need to buy (and stockholders did not want them to buy) when SWX already had a core asset that is poorly performing and receives minimal attention from management?!

SWX False Statement: “We paid a fair price for MountainWest”

THE TRUTH: SWX management claims they purchased Questar at 9.8x EV/E. We believe they actually paid 11.6x! The 11.6x EV/E multiple is 45% higher than a more accurate peer average. The difference in purchase price multiple is two-fold: the EBITDA metric should be the most recent EBITDA (2022) instead of the old EBITDA (2021); and it is misleading to reduce the transaction value by the basis step-up. SWX used 2021 EBITDA of $182 million in its presentation announcing the Questar deal but then guided 2022 EBITDA to only $170 million. The 7% decline happened in just a few months from 10/5/21 to 3/1/22. We are not sure whether SWX’s diligence process was flawed or if they hid the real number so that the deal would appear cheaper (or perhaps both). SWX’s presentation compares their highly optimistic view of the purchase price vs. a comp set of best-in-class mega caps (that were not adjusted for tax). The reality is that Questar is a small asset that is shrinking and should not be compared to mega caps that grow. A better comp set is, at a minimum, smaller companies – and those had an average EV/E of 8x (from 10/1/19 to 4/8/22).

We are not the only ones who believe that SWX overpaid. Bank of America’s base case valuation for Questar is $1.365 billion (31% lower than the purchase price, according to the Bank of America report dated 03/30/22). Wells Fargo’s valuation is $1.6 billion (19% lower than purchase price, according to the Wells Fargo report dated 04/07/22).

SWX False Statement: “We are on track with the integration of MountainWest and are already benefitting from strong operating cash flows from the acquisition”

THE TRUTH: SWX’s stated 2021 EBITDA expectations for Questar were $182 million and it was praised as “highly contracted” and “stable.” Yet between the acquisition announcement (10/5/21) and guidance issuance (03/01/22), EBITDA expectations fell from $182 million to $170 million or 7%?! This appears to be either a failure in diligence or was a disguise to attempt to show that the acquisition was cheaper than what was really expected (or perhaps both).

SWX False Statement: “Mr. Icahn’s claims that (i) Southwest Gas is an outlier in now owning an attractive and adjacent FERC-regulated business and (ii) all industry participants are pursuing divestiture strategies to be only regulated utilities are factually incorrect.”

THE TRUTH: We never said all utilities are selling all of their midstream assets. We did say that no other utilities are actively buying midstream assets. In fact, Dominion, DTE, ConEd, OGE, CenterPoint and NextEra all recently sold all or some of their midstream assets. SWX is the only utility buyer of midstream assets.

SWX False Statement: “MountainWest positions Southwest Gas to explore and deliver on numerous attractive opportunities in renewable natural gas, responsibly sourced natural gas, hydrogen and CO2 transportation”

THE TRUTH: If SWX management wanted to invest in the energy transition they would have invested in their own backyard. Renewable natural gas is best sourced from landfills (located near population centers) and agricultural waste. Arizona, California, and Nevada have larger populations, and Arizona and California have significantly more farms than Wyoming and Utah. Green hydrogen relies on low-cost electricity to use electrolyzers to create hydrogen. The lowest cost electricity is typically stranded renewables and Arizona, Southern California and Nevada are perfect candidates given the desert climate. CO2 transportation/storage/capture are best suited in areas with significant industrial production and with depleted oil & gas fields for storage (e.g., Gulf Coast).

SWX False Statement: “We have identified numerous opportunities to enhance the value of the MountainWest assets and to foster growth”

THE TRUTH: Has the SWX incumbent board of directors performed diligence on the Overthrust Pipeline? As we understand, FERC-regulated natural gas pipelines are not supposed to earn 30% ROEs over the long run. We expect that Overthrust will someday go through a rate case and earnings could be reset to a ~10% ROE, which would cause a $30 million drop in EBITDA (an 18% hit to 2022 EBITDA guidance of $170 million). If you combine declining natural gas production in the Pinedale and Piceance basins with a pending reset of Overthrust earnings, there is far more downside risk than upside to Questar EBITDA. There is a reason that synergistic buyers would not bid higher than $1.7 billion!

SWX False Statement: “Your [incumbent] SWX Board and management team have the plan and skills to grow Southwest Gas through the energy transition. Mr. Icahn does not”

THE TRUTH: We are no stranger to the energy transition. We have invested ~$200 million in renewable diesel units at CVR Energy Inc. We were a significant investor in Occidental Petroleum, a company that is building one of the largest carbon capture businesses in the U.S. We are a significant investor in Cheniere Energy, a company that is the largest exporter of natural gas in the U.S. We have also recruited a highly independent, experienced, and qualified slate of nominees who have served as utility executives and regulators who are well suited to lead SWX through the energy transition.

SWX False Statement: “Time and time again we have stated that the equity offering was completed well after the March 21, 2022, record date had passed. As such, none of the shares issued in the financing will have voting rights at the Annual Meeting.”

THE TRUTH: As currently stands, both parties agree that the newly issued shares will not be able to vote. That said, SWX is insulting our intelligence by failing to address the key issue. If SWX decides to move the record date in the future, or if they move the meeting date in a way that requires moving the record date, then the newly issued shares WILL be entitled to vote. We continue to ask whether SWX will commit to NOT moving the record date or moving the meeting date in a way that necessitates moving the record date – but, tellingly, they refuse to answer. This clearly means to us that SWX is reserving the right to move the record date should they need to do so to manufacture an artificial victory and deprive stockholders of a fair election process.

SWX False Statement: “Mr. Icahn made his illusory offer [to purchase all the shares at $82.50 per share] only after the Company announced the commencement of the public offering of common stock”

THE TRUTH: We made a public proposal on March 1^st answering SWX’s overpaid investment banker’s “questionnaire,” wherein we reiterated once again that we were willing to pay $75 per share and would be willing to beat any bona fide offer. We never once received a counteroffer or even a call back. Even though SWX claims it has raised equity at $74 per share, the reality is that, after expenses, SWX actually raised equity at only $71.50 per share. It is unclear how $71.50 per share price is superior in any way to $75 per share, let alone the $82.50 per share that we publicly offered well in advance of the pricing of this recent offering.

SWX False Statement: “Mr. Icahn also failed to mention it would be illegal for Mr. Icahn to buy shares of Southwest Gas in a financing in light of pending tender offer”

THE TRUTH: The tender offer contains a condition allowing us to withdraw the offer if SWX pursues any equity financing that is not offered pro-rata to all existing stockholders. The recent public equity offering clearly triggered that condition and would have allowed the tender offer to be withdrawn. We could then have acquired the shares at a 15% premium to the price SWX received after fees. We could then have relaunched the tender offer.

SWX False Statement: “Mr. Icahn said he is nominating 10 candidates in support of his efforts to take control of the Company for $82.50 per share.”

THE TRUTH: We have nominated a slate of ten directors to replace SWX’s incumbent board of directors, who believe in entrenchment and self-enrichment at the expense of SWX’s stockholders and customers. Eight of the ten directors are entirely independent of IEP. These eight individuals have no voting agreements, no compensation packages, no overlapping boards, and no overlapping work history with IEP. All ten directors will serve as fiduciaries to the company. The tender offer is a choice. Stockholders should have the right to decide for themselves whether or not they want to participate in the tender offer. Unfortunately, SWX’s incumbent board of directors have decided that stockholders should not have the right to choose their own outcomes.

SWX False Statement: “Your Board believes the Company is worth more than $82.50”

THE TRUTH: If the board actually believed that SWX was worth more than $82.50 per share then why was the company selling shares in the $60s as recently as September 2021 and why did SWX just sell shares at an effective price of $71.50 per share to finance the ill-advised Questar deal?