updated 07:14 pm EST, Thu March 7, 2013
Investor reportedly owns six percent of outstanding Dell shares
As previously reported, Carl Icahn has recently purchased millions of shares of stock in computer manufacturer Dell ahead of an attempt to take the company private. Since the report of the purchase, he has demanded Dell pay $15.7 billion in special dividends above the buyout price. Icahn's proposed dividend of $9 per share represents a 67 percent premium to existing shareholders above the current $13.65 offer on the table for the leveraged buyout proposed by Michael Dell, Microsoft, and investment company Silver Lake.
Icahn submitted a letter to Dell's board, telling them that accepting his proposal would "avoid a proxy fight." To expedite the payment, Icahn offered a $3.25 billion dollar loan, if needed. The letter wants Dell to combine the shareholder vote on the buyout deal into its annual general meeting, with Icahn putting forth his own candidates for the board of directors of the company.
"If you fail to agree promptly to combine the vote, we anticipate years of litigation will follow -- challenging the transaction and the actions of the directors that participated in it," claimed Icahn. In addition to the bridge loan, Icahn Enterprises would also provide $2 billion of financing for the dividend, assuming its candidates for the board of directors are elected.
The privatization deal requires the majority of the shareholders (not including Michael Dell's shares) to vote in favor of the payout. Icahn's six percent share, if coupled with the coalition against the deal now, brings up the known opposition to the deal at 20 percent of the total -- nearly half what would be required to defeat the deal.
Southeastern Asset Management, another vocal opponent of the buyout, would lose at least $825 million if the deal completes. Chief Executive of Southeastern, Mason Hawkins, has railed against mismanaged companies that his company has held stock in previously. Icahn worked with Southeastern Asset Management previously, most notably when dealing with the CEO misconduct issue with the Cheseapeake Energy Company in 2012.