Dell $24.4 Billion Buyout Complicated By Entrance of Investor Icahn

By Jeffrey Burt  |  Posted 2013-03-06 Print this article Print

However, soon after the deal was announced Feb. 8, some shareholders began balking at the $13.65-per-share price, saying it undervalued the company and shortchanged investors while favoring Michael Dell. Officials with both Southeastern Asset Management and T. Rowe Price both have said the companies will oppose the deal, as have a number of smaller investors. Southeastern officials have said they believe a fair price would be as much as $24 per share, and have said they would consider going as far as leveraging a proxy fight to kill the deal as is.

Icahn’s entrance into the fray only complicates things for Michael Dell. Icahn is known for high-profile efforts to force companies to move as he believes they should. That has included well known battles over the decades in such industries as airlines—as in the takeover of TWA in the 1980s—to movies (Lions Gate) and trucking (OshKosh Corp.). In the technology space, he has been involved in controversies from Yahoo to Motorola to Netflix.

A 6 percent share in Dell—CNBC said Icahn had amassed as many as 100 million shares—would make him among the company’s largest investors and a factor in whether the deal would play out. CNBC reported that unnamed sources said that Icahn has met with the Dell board’s special committee urging them to abandon the leverage buyout plan and instead opt for a leveraged recap, which would include Dell buying shares back and keeping the company public.

Icahn reportedly has told people he opposes Michael Dell’s plan to take the company private. The deal needs a majority of shareholders to approve it in order to go through. According to Barron’s, the shareholders that have voiced opposition to it hold more than 20 percent of the shares. Michael Dell, with his 15 percent of the shares, is excluded from the number of investors needed for approval.

While the shareholder struggle wages, the deal is also in the midst of a “go shop” period, where the special committee can entertain any other offers for the company. The window closes March 22, though should there be a legitimate offer on the tablet, the committee could go beyond that date to continue negotiations.

Representatives from HP, Lenovo and Blackstone have declined media requests for comments on their reported interest.


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