updated 04:28 pm EDT, Mon March 11, 2013
Latest step advances Icahn's agenda, extant deal likely to be modified
New Dell investor Carl Icahn has agreed to sign the confidentiality agreement in order to allow access to the company's financial information. The investor is part of a larger group intending on torpedoing the current offer of $13.65 per share to take the company private. Dell's stock currently stands at $14.27, climbing on the news of Icahn's involvement in negotiations.
Last week, Icahn demanded that Dell pay out $15.7 billion in dividends to shareholders to supplement the offer to go private. He viewed a deal proposed by CEO Michael Dell, investment company Silver Lake Partners, and Microsoft was a good deal for the investors, at the expense of shareholders, primarily benefitting Michael Dell himself.
Including a modest boost in per-share price to $13.81, the proposal offers shareholders $22.81 per share for the manufacturer and services company to go private. The increase represents a 67 percent premium above and beyond the current offer.
"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 a letter to the board of directors and companies proposing the deal last week. To expedite the payment, Icahn offered a $3.25 billion dollar loan, plus $2 billion of financing for the dividend, assuming Icahn's 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.