Icahn revamps Dell offer and issues shareholder call to arms
Activist investor still in the mix with $16bn tender offer as letter insinuates Dell has not run a reasonable go-shop process
Carl Icahn has laid out a revamped offer to buy Dell while accusing the vendor's eponymous leader and his backers of "negatively positioning the very product they are trying to sell".
In an open letter to Dell shareholders yesterday, the activist investor reiterated his belief that the Michael Dell and Silver Lake bid to take the PC maker back into private hands "significantly undervalues the company". He also laid out a new $16bn (£10.4bn) tender offer to acquire the Texan firm.
Today's news comes just a few days after reports surfaced claiming that Icahn might be ready to throw in the towel in his quest to prevent the Michael Dell-fronted deal from going ahead. The investor's rejigged proposal will allow existing shareholders to cash in 72 per cent of their stock in a tender - potentially more if others decline to do so - at a $14-a-share price. This represents a slight premium on the Dell-Silver Lake bid of $13.65 a share.
The new Icahn-led deal will be funded by $5.2bn in senior debt financing, $7.5bn in existing Dell cash reserves and $2.9bn generated via the sale of Dell receivables. This will leave the vendor with cash stocks of about $4.9bn to fund ongoing operations, he claims in his letter.
Icahn today urged shareholders to vote down the opposing bid in a special meeting on 18 July. Assuming the Dell-Silver Lake deal is nixed, he then wants stockholders to approve his bid and "elect our slate of directors".
Icahn opened his missive by insinuating that Michael Dell and his boardroom allies have not conducted a reasonable "go-shop" process. During the initial two-month go-shop period potential suitors are invited to submit bids to rival the initial offer. Any qualifying bidders are then invited to enter into talks with the special committee overseeing the acquisiiton.
The activist investor claims the vendor's founder and his backers have repeatedly made "statements...that demean the prospects of Dell".
"In what other context would the person tasked with selling a product actually spend their efforts negatively positioning the very product they are trying to sell?," he writes. "Can you imagine a real estate broker running advertisements warning of termite danger in a house each time a prospective buyer seems interested?"
Icahn also revealed that he has acquired a further 72 million shares in Dell, purchased from supporter Southeastern Asset Management (SAM). This deal is thought to have taken his total stockholding to more than eight per cent, and he claims that, between them, he and SAM hold about 13 per cent of the company.