Dell Investors Icahn, Southeastern Put Hurd, Cappellas on CEO List
Dell investors Carl Icahn and Southeastern Asset Management are floating some names as possible CEO replacements for Michael Dell in case they are successful in derailing his efforts to buy out his namesake company and take it private.
According to a report in Reuters, the short list of names looks familiar to a rumored list put together by private equity firm Blackstone Group in March, when that company was putting together a bid to compete with the $24.4 billion proposal from Michael Dell and Silver Lake Partners.
Michael Hurd, former CEO of Hewlett-Packard and current president at Oracle, and ex-Compaq and MCI CEO Michael Cappellas are people who appear on both the Blackstone and Icahn/Southeastern lists, according to Reuters. In addition, Todd Bradley, executive vice president of HP's Printing and Personal Systems Group—the unit that includes PCs—and Michael Daniels, a 36-year IBM veteran who retired in March after heading up the company's massive services business, are mentioned, the news site said, referring to two unnamed sources.
Several candidates already have been contacted by Icahn and Southeastern, according to the sources.
Icahn and Southeastern are looking to spike a $13.65-per-share proposal by Michael Dell and Silverlake Partners that was first unveiled in February. The deal got pushback from major investors—including Southeastern and T. Rowe Price—who said the bid greatly undervalued the world's third-largest PC maker and benefited Michael Dell at the expense of shareholders and that they would vote against it.
Michael Dell has argued that taking the company private—and away from the scrutiny of Wall Street—is the best move as the company continues its difficult transformation from a PC and server maker to an enterprise IT solutions provider. The company has spent billions of dollars buying dozens of companies over the past several years to shore up its capabilities in such areas as storage, networking, security, software and services.
Blackstone briefly floated a possible counterproposal, but eventually pulled it back. Icahn and Southeastern have partnered in a bid that gives investors the option of selling out for $12 per share or to buy more shares. It also would keep the company public.
Dell's board of directors on June 5 came out in support of the Michael Dell-Silver Lake option, saying it's the best option for investors. The directors also questioned the validity of the $12-per-share price in Icahn's bid, noting a "significant liquidity gap" that could drive down the per-share price to as low as $8.50, causing a $3.9 billion shortfall.
Their plan didn't take into account such issues as possible cash flow shortfalls, debt service or various fees connected with the Michael Dell proposal, all of which could contribute to the liquidity gap.
Icahn and Southeastern have promised to wage a proxy battle if their proposal is rejected, and will try to have their own slate of director candidates elected and take control of the company. Shareholders are scheduled to vote on the Michael Dell-Silver Lake bid July 18.
Icahn and Southeastern, in a June letter to shareholders filed with the Securities and Exchange Commission, urged investors to reject Michael Dell's proposal during the special meeting July 18.
In an interview with CNBC in May, Icahn said the company will have a new CEO if his proposal with Southeastern is approved by shareholders.
"You need a new CEO," he told CNBC. "You'd need to change the culture. … If our board's elected, he's not going to be running the company. That, I can guarantee 100 percent."