Icahn secures funding for Dell bid

Maverick investor prepares for stock buyback

Tags: Dell CorporationMergers and acquisitionsUSA
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Icahn secures funding for Dell bid Carl Icahn’s latest proposal is said to be a stock buyback involving 1.1bn shares at $14 apiece. (Getty Images)
By  Stephen McBride Published  June 24, 2013

Carl Icahn's investment bank funder, Jefferies & Co, has agreed to provide $5.2bn for the billionaire investor's bid for Dell Inc, Reuters reported yesterday, citing sources.

"Nothing has changed regarding the financing," Icahn said in an interview last week, echoing statements made in a letter to Dell shareholders, following rumours of his bid being withdrawn.

"We expect to have $5.2bn in the next couple of weeks. Our investment bank [Jefferies] is already committing $1.6bn and my affiliates and I would provide $2bn, if necessary."

The funds will support Icahn's plan to keep the world's number-three computer manufacturer as a publicly traded entity. The proposal by Icahn and his partner, Southeastern Asset Management, is offered as an alternative to that of a leveraged buyout, tabled by Dell co-founder and CEO, Michael Dell and Silver Lake Partners, which would take the company private.

On July 18, when shareholders are due to vote on the Dell-Silver Lake bid of $13.65 per share, Icahn is expected to present an alternative. Initially he was expected to offer $12 per share in cash or $12 per share in stock valued at $1.65 per share, but stakeholders would retain their stock. That plan is said to have changed. Now, according to Reuters, Icahn will encourage shareholders to agree to a stock buyback involving 1.1bn shares at $14 apiece.

Icahn and Southeastern own 13% of Dell stock between them and have long argued that Michael Dell's proposal was undervalued. With 9%, Icahn is now Dell's second-largest shareholder after Michael Dell. Icahn bought half of Southeastern's stake for $13.52 per share.

"Despite the company using scare tactics concerning the company's health, you cannot get away from the fact that their own consulting firm, BCG, believes the company would earn $3.3bn for 2014," Icahn said in the interview last week. "This means the 670m shares left outstanding after our tender will earn $3.72 per share."

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