updated 05:31 pm EDT, Fri May 10, 2013
Counter-offer allows shareholders to keep shares, pays significant dividend
Investor Carl Icahn and Southeastern Asset Management have proposed a new offer to Dell shareholders, who are considering a proposal by founder Michael Dell's group of investors, including Microsoft, to purchase existing shares at $13.65 each in order to take the company private. In a letter to Dell's board of directors, Icahn and Southeastern are counter-proposing a deal to give all Dell shareholders the option to retain shares in the company, plus take an additional $12 a share in cash or stock.
Icahn, Southeastern and several other large Dell shareholders have said the company is selling out too cheaply to Mr. Dell and Silver Lake. The letter claims Icahn and Southeastern combined retain 13 percent of Dell stock. Michael Dell and his investors control 16 percent.
"You now have the opportunity to ameliorate the damage that we believe you have caused to Dell and its shareholders by following the fair and reasonable path set forth in this letter," Icahn and Southeastern President G. Staley Cates wrote to the board.
On CNBC's Fast Money Halftime Report show, Icahn revealed that on Monday he will nominate a slate of 12 new directors and, if successful, he'll see to it that Michael Dell doesn't remain in his position as chief executive. "He will not be running the company," Icahn said. He did add that it was "not that I have anything against [Michael] Dell. I'm sure he's a very nice guy, but it's a new world out there."
The special committee of Dell's board is reportedly "carefully reviewing" the offer by Icahn and Southeastern. A statement by the committee said that "consistent with the Special Committee's goal of achieving the best possible outcome for all shareholders, we and our advisors are carefully reviewing the potential transaction to assess the potential risks and rewards to the public shareholders."
During the CNBC interview, Icahn lit into the Dell board of directors, saying that shareholders would "literally get screwed" by the Silver Lake offer to take the company private. Icahn claims his deal would generate more money for everyone, including existing investors, while Michael Dell's deal benefits just the coalition of investors that made the offering.