Billionaire investor Carl Icahn enters fray over Dell’s sale

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Billionaire investor Carl Icahn enters fray over Dell’s sale

Warwick Ashford

Billionaire investor Carl Icahn has entered the fray over the proposed sale of PC maker Dell to the company’s founder.

In a letter to the Dell board, he threatened “years of litigation” if they do not come up with an alternative to selling the company to Michael Dell for $24bn.

Michael Dell made the offer in February, with a $2bn loan from Microsoft, to buy back the computer company he founded in 1984.

Analysts said Michael Dell is betting that taking the company private will make it easier to boost the company’s fortunes by shifting to software and services in the face of a shrinking PC market .

Michael Dell and private equity firm Silver Lake agreed to buy Dell for $13.65 a share, but the board said in a statement it was under pressure after investors complained the offer was too low.

The company’s second- and third-largest investors, Southeastern Asset Management and T Rowe Price, have opposed the deal because they say the company is worth $24 a share.

Dell shares are currently trading at around $14 which, although below the valuation by major shareholders, is still above the offer of the group led by Michael Dell.

Now Icahn has urged the board to commit to the special dividend of $9 a share if shareholders vote against the sale to the company’s founder and Silver Lake.

If the board fails to make the commitment, Icahn warned he would seek to replace the board with directors who would approve his plan, according to the Telegraph.

“We see no reason that the future of Dell should not accrue to all the existing Dell shareholders - not just Michael Dell,” he said in his letter.

Icahn said that his plan values each Dell share at $22.81, which is closer to the valuation by Dell’s biggest shareholders than the offer from Michael Dell and Silver Lake.

Analysts say the opposition from Icahn will put more pressure on Michael Dell and his backers to raise their offer.

Earlier this week, Dell’s board said that any rival bids have to be made by 22 March 2013.


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