Carl Icahn Proposes A $14 Per Share Tender Offer For Dell Inc. (DELL)

Posted Jun 18, 2013

Carl Icahn has proposed to take control of Dell Inc. (NASDAQ:DELL) by offering 1.1 billion shares at $14 per share.  This offer is 35 cents per share higher than the one that is offered by CEO Michael Dell and private equity company Silver Lake Partners, according to AllThingsD.

Icahn also purchased over 72 million Dell shares from Southeastern Asset Management.  Southeastern is a Tennessee based investment company that is Dell’s largest outside shareholder.  This purchase made Carl Icahn the largest shareholder with 152 million shares after Michael Dell.

Earlier this week, we reported that Carl Icahn was going to walk away from the deal.  Boy, were we wrong on that one.

Southeastern and Carl Icahn previously had a plan to recapitalize Dell and offer shareholders a $12 per share dividend that would be financed with existing cash and new debt.  Dell’s special committee on the board criticized Icahn’s plan for having a liquidity gap of around $4 billion.

Icahn said that the funding for the tender offer would be provided from $5.2 billion in debt financing, $7.5 billion in cash that Dell has on hand, and $2.9 billion that would come from selling Dell’s receivables.  This would leave the company with $4.9 billion worth of cash to fund their existing operations.

“We are proceeding to obtain commitments for $5.2 billion of senior debt financing to be made available to Dell as a bridge loan to guaranty the tender offer and believe that we are on target to achieve that result. A major investment bank has indicated its willingness to make available $1.6 billion and Carl Icahn and his affiliates would make available $2 billion if necessary to facilitate this commitment,” read a statement from Carl Icahn’s office.  The investment bank involved in the financing is Jefferies & Co.