Dell $24.4 Billion Buyout Complicated By Entrance of Investor Icahn

The deal, which already is seeing significant investor resistance, could become more difficult as Carl Icahn grows his stake in Dell.

Michael Dell’s efforts to buy out his namesake company and keep control of it after taking it private are rapidly getting more complicated and problematic.

The deal to sell the world’s third-largest PC maker to a group headed by Michael Dell and included investment firm Silver Lake Partners and software giant Microsoft—already under heavy opposition from two of the company’s largest shareholders—was further shaken by reports March 6 that activist investor Carl Icahn has recently amassed more shares of Dell stock, bringing his stake to as much as 6 percent of the company.

At the same time, rivals Hewlett-Packard and Lenovo—the two largest PC vendors in the world—reportedly also have considered making a bid for Dell, though sources in new reports have questioned whether either company has any real in interest in buying Dell or were using the opportunity to get a closer look at their competitors’ books.

Another company, private equity firm Blackstone Group, also reportedly has shown interest in Dell, though an unnamed source told Reuters that any interest was only preliminary.

That said, all these machinations, combined with the already strong opposition to deal by Southeastern Asset Management and T. Rowe Price—which combined hold about 13 percent of Dell stock—are indications that the plan announced by Dell executives a month ago to sell the company and take it private is going to be a hard-fought victory if it happens.

Michael Dell and other company executives began talking to the board of directors in August 2012 about the idea of taking Dell private. Analysts have said that, from a strategic standpoint, such a move makes sense. It would allow Dell officials to ramp up their efforts to transform the company from a maker of commodity PCs to a vendor of enterprise IT solutions and services, reducing its reliance on a PC market that continues to see sales contract.

They would also be free to make strategic decisions away from the scrutiny of Wall Street and the pressures of having to meet quarterly financial goals, the analysts said.

The board of directors created a special committee to determine the best path forward for Dell. According to a statement released by the committee earlier March 6, the group looked at all options—from keeping the company on the same course it had been to selling off parts or all of the business. The deal to sell to Michael Dell and his group made the most sense to both shareholders and the company, the committee said.