Dell drama sees rise of new alliance

Icahn, Southeastern team up in $21bn win-win cash offer

Tags: Dell CorporationMergers and acquisitionsUSA
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Dell drama sees rise of new alliance Under the new offer, shareholders receive $12 for every share held, plus they get to hold on to the stock. (Getty Images)
By  Stephen McBride Published  May 12, 2013

A new alliance has emerged in the ongoing battle for control of Dell Corp, Reuters reported over the weekend.

Maverick investor Carl Icahn, initially a lone suitor, has teamed up with Southeastern Asset Management Inc, to table an offer to stakeholders of $12 in cash for every share owned, which would also allow the retention of those shares.

In early January, rumours were confirmed of a leveraged buyout of the world's third-largest computer manufacturer by its founder, Michael Dell, and private equity company Silver Lake Management LLC. The Dell-Silver Lake offer was for $13.65 a share and was part of a plan to take Dell Corp private amid slumping global PC sales.

Shareholders promptly expressed disappointment in the offer, with Southeastern Asset Management - holder of an 8.5% stake - writing a detailed letter to Dell's board, in which it argued the offer price per share should be closer to $24.

Icahn surfaced as another challenger to the LBO when he quickly acquired a 6% stake during the so-called go-shop period, when rival bids and objections are considered by the board. Icahn, known for his abrasive style and a propensity for shaking up boardrooms, initially supported recapitalisation. He subsequently demanded a large dividend payout to shareholders and threatened a proxy fight if his requirements were not met.

Under the Icahn-Southeastern proposal, shareholders would get to retain their shares, while receiving more cash than they would from Michael Dell and Silver Lake. The $21bn proposal has so far met with approval from shareholders, but Icahn has warned that if the offer is rejected by the board he and his partner will nominate a new board of directors and push for control of the company. Should they be successful, Michael Dell would lose his position as chairman and CEO, Icahn told CNBC on Friday.

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