Report: Icahn takes 6% stake in Dell
U.S. business magnate Carl Icahn has reportedly taken up to a 6 percent stake in computer maker Dell (Nasdaq: DELL), pitting him against Michael Dell, who is trying to take the computer maker private, according to trading sources cited by CNBC.
The sources said that Icahn had purchased up to 100 million shares over the last two weeks, which would give him around a 6 percent stake in the struggling firm. Icahn declined to comment about the matter, CNBC said.
People familiar with Icahn's thinking said that he is urging advisors in Dell's special committee to pursue a leveraged recapitalization of the firm, rather than the leveraged buyout being proposed by Michael Dell and a group of investors.
The special committee was tasked to solicit and evaluate competing offers to Michael Dell's offer. Icahn was asked by the committee to participate in the committee's efforts and to sign a confidentiality agreement, but Icahn has not agreed to do so, according to the report.
Icahn appears to be siding with Southeastern Asset Management, which holds an 8.4 percent stake in Dell and opposes the leverage buyout by Michael Dell. For the buyout to go through, a majority of shares not owned by Michael Dell would have to vote in favor of the deal. With Icahn joining the opposing side, the buyer group might have to offer a higher price to get shareholder approval, according to the CNBC report.
The special committee issued a statement on Wednesday that it "negotiated aggressively" to get the $13.65 per share offer from Michael Dell, which it believes offers the "best possible value" to shareholders. The committee said it would continue the "go-shop" period for seeking alternative offers until the March 22 expiration date and would continue negotiations past that date "if a potentially superior proposal emerges."
Last month, Michael Dell and a group of buyers that includes Sliver Lake and Microsoft (Nasdaq: MSFT) reached an agreement with Dell's board of directors to pay $13.65 per share for Dell's stock, a 37 percent premium over Dell's average closing price over the three months prior to the signing of the agreement.
The company's founder is contributing his 14 percent stake in Dell along with cash through his private investment firm MSD Capital. Silver Lake is contributing $1 billion in cash, and Microsoft is loaning the group $2 billion.
At close of trading on Wednesday, Dell's stock was trading at $14.32 per share, up 1.78 percent on the day.