Carl Icahn Steps Up Against Dell’s Counter-Offer

Posted Jul 15, 2013

Carl Icahn
is currently in a bidding war against Dell’s CEO Michael Dell.  Michael Dell created a plan to take the company he founded, Dell Inc., private with the help of private equity firm Silver Lake.  Carl Icahn, one of the largest shareholders in Dell, made a counteroffer with the help of Southeastern Asset Management.  Icahn said that he would be adding warrants to his bid of $14 per share for 72% of the total shares in the company at a later date.

Unfortunately for Icahn, Dell’s board of directors recommended that shareholders accepted the $24.4 billion offer from Michael Dell and Silver Lake.  Icahn said that this offer undervalues the company.  Icahn currently owns 9% of Dell.  Dell’s shareholders will be voting on Michael Dell’s offer on July 18th.

Icahn said that Dell should buy back 1.1 billion shares at $14 per share, but now he is offering an opportunity for investors to buy one Dell share for $20 during the next seven years.  Icahn said that his whole proposal is worth around $15.50 to $18 per share.  Michael Dell and Silver Lake offered to buy all of Dell for $13.65 per share.

Since Dell’s PC business has been on a downhill slide over the last several years, Michael Dell pledged to move quicker in the mobile device and business software markets.  He wants to have the company removed from the stock exchange so that he can focus on product development without constant scrutiny from shareholders.