Icahn, Southeastern Offer a Bid for Dell

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Dell’s board of directors has received yet another buyout bid, this time from two of its largest shareholders—Carl Icahn and Southeastern Asset Management. The company is currently considering an offer from founder Michael Dell and private-equity firm Silver Lake Partners that would take the company private.

Andrew Ross Sorkin and Michael J. De La Merced with The New York Times reported, “The billionaire Carl C. Icahn and Southeastern Asset Management, two of Dell’s biggest shareholders, plan to bid for the struggling computer maker, seeking to challenge a $24.4 billion takeover that they have criticized as ‘the great giveaway.’ The effort by Mr. Icahn and Southeastern, disclosed in a letter to Dell’s board Thursday night, is intended as a last-ditch effort to fight the management buyout led by Michael S. Dell, the company’s founder and chief executive, and the private equity firm Silver Lake. Unlike that bid, which would pay shareholders $13.65 a share in cash, Mr. Icahn and Southeastern are offering to pay shareholders about $12 a share either in cash or in additional shares in the company. The offer would still leave a portion of Dell publicly traded.”

According to The Wall Street Journal’s Shira Ovide, “People familiar with Dell’s board deliberations have said they considered options to keep Dell public and pay out a large dividend by borrowing money—a step known as a leveraged recapitalization, as Mr. Icahn and Southeastern are proposing. Those people said the board ruled out those options in part because directors worried it was too risky to both keep Dell public and burden Dell’s shaky business with piles of borrowed money.”

David Gelles with The Financial Times noted, “Mr Icahn and Southeastern threatened the removal of Dell’s board at the annual meeting if the company’s directors did not recommend the latest offer as ‘superior’ to that of Mr Dell’s. ‘The company has suffered long enough from very wrong-headed decisions made by the board and its management. Do not make another by putting the company through an unnecessary debilitating proxy fight,’ they said in the letter, which was signed by Mr Icahn and G. Staley Cates, Southeastern president.”

Computerworld’s John Ribeiro recalled, “Another bidder, Blackstone Group, gave up its bid for Dell in April citing ‘an unprecedented 14 percent market decline in PC volume in the first quarter of 2013’ and the company’s eroding financial profile. ‘Since our bid submission, we learned that the company revised its operating income projections for the current year to $3.0 billion from $3.7 billion,’ it said. The offer had aimed to keep Dell publicly-traded, and offered investors the option to stay invested or sell their shares for more than $14.25 in cash per share.”