Icahn Takes Stake in Dell, Proposes Alternative to Buyout

by Christopher Freeburn | March 7, 2013 9:02 am

Icahn_106352500[1]Carl Icahn has thrown a potential monkey wrench[2] into Michael Dell’s plan to take the computer company he founded private.

The billionaire investor, who owns about 6% of Dell (NASDAQ:DELL[3]) shares, sent a letter to the company’s board suggesting that Dell pay shareholders a $15.7 billion dividend instead of accepting the $24.4 billion buyout of the company led by its founder, Reuters noted.

He is asking the board to combine his proposal with a shareholder vote the buyout. If the board doesn’t accede to his demand, he has threatened “years of litigation.”

Icahn noted that the buyout deal “substantially undervalues” Dell. In place of the purchase, he says that Dell should issue a special dividend of $9 a share. The dividend would ensure that Dell’s future value would be shared by all shareholders, Icahn argues. The dividend would be funded through $5.25 billion in financing.

With his proposal, Icahn becomes Dell’s second big stakeholder to contest the buyout plan. Southeastern Asset Management, has also criticized the buyout plan, suggesting asset sales or a major share buyback instead.

Last month, Michael Dell announced that he would head a consortium of investors, including Microsoft (NASDAQ:MSFT[4]) and Silver Lake Partners, that would acquire the struggling computer maker for $13.65 a share[5].

Shares of Dell rose fractionally in pre-market trading on Thursday.

  1. [Image]: https://investorplace.com/wp-content/uploads/2010/11/Icahn_106352500.gif
  2. thrown a potential monkey wrench: http://www.reuters.com/article/2013/03/07/dell-specialcommittee-idUSL4N0BZ3ZY20130307
  3. DELL: http://studio-5.financialcontent.com/investplace/quote?Symbol=DELL
  4. MSFT: http://studio-5.financialcontent.com/investplace/quote?Symbol=MSFT
  5. that would acquire the struggling computer maker for $13.65 a share: https://investorplace.com/2013/02/dell-to-go-private-in-24-billion-buyout/

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