Icahn adds last-minute sweetener to Dell offer

Share warrants intended to spruce up bid; share dip shows market unimpressed, say analysts

Tags: Dell CorporationMergers and acquisitionsUSA
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Icahn adds last-minute sweetener to Dell offer Carl Icahn wants to block the go-private plans of Dell Inc’s founder and CEO, Michael Dell. (Getty Images)
By  Stephen McBride Published  July 14, 2013

Carl Icahn and his Dell Inc bid partner Southeastern Asset Management Inc added purchase entitlement warrants to their $14-per-share offer in an attempt to gain shareholder interest ahead of Thursday's vote on the future of the world's number-three PC maker, Reuters reported this weekend.

Icahn and Southeastern claim the warrants - which would entitle the holder to buy Dell shares for $20 apiece for the next seven years - inflate the value of their proposal to between $15.50 and $18 a share. Dell founder and CEO, Michael Dell and his co-bidder Silver Lake Partners, have tabled a straight $13.65-per-share proposal, which, if accepted, would give them control of the company and allow them to take it private - a move Icahn and Southeastern hope to block.

Dell's board is said to favour the Dell-Silver Lake option and as suggested to shareholders that continuing to hold stock is risky.

"It is critical that Dell shareholders not be distracted from the clear choice they must make next week - take $13.65 per share in cash or bear the risks of continuing to hold their Dell shares," it said.

Analysts saw Friday's 0.18% dip in Dell's share price as an indication that Icahn's offer was not seen as particularly attractive.

"If Icahn was such a great alternative, you would have thought that Dell's share price would have gone higher," said Susquehanna Financial Group analyst King She. "That tells me that people may not be so positive about Icahn's proposal in general."

Several shareholder groups have said they will vote against the Dell-Silver Lake offer because it undervalues the company.

Shareholders will only get the chance to consider Ichan's proposal if Thursday's vote goes against Dell-Silver Lake.

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