Carl Icahn and Southeastern join forces in fight over Dell

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Carl Icahn and Southeastern join forces in fight over Dell

Warwick Ashford

US billionaire investor Carl Icahn has teamed up with the second largest investor in Dell in his latest attempt to prevent the company being sold to founder Michael Dell.

In a bid to reverse the company’s recent decline with the shrinking PC market, Michael Dell and private equity firm Silver Lake made a $24.4bn purchase offer in February.

Michael Dell is seeking to regain majority control so he can pursue his plan to retool the struggling company as a maker of datacentre equipment and software for corporations.

But the biggest shareholders were unhappy with the deal, which valued the company at $13.65 a share, well below their estimation of $24 a share.

Carl Icahn entered the fray over Dell's sale in support of the unhappy shareholders, at first teaming up with private-equity group Blackstone in March 2013.

But in April 2013, Blackstone withdrew because of concerns over an unprecedented drop in PC sales and Dell reduced its operating income projections for the year to $3bn, down from $3.7bn.

Now Carl Icahn has teamed up with Southeastern Asset Management, offering to pay $12 a share in cash or stock and let investors hold on to equity in the computer maker, according to Bloomberg.

Icahn and Southeastern – which together own 13% of Dell – said in a letter to the board that their offer gives investors a chance to benefit from future growth at Dell, which is more valuable than the buyout proposal.

Financing for the proposal will come from Dell's $9bn in cash and $5.2bn in new debt, compared with about $16bn in debt under the buyout proposal, according to Icahn’s letter.

Icahn and Southeastern have warned that, if the board does not accept their proposal, they will put up a slate of 12 directors to challenge the current board at the annual shareholder meeting.


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