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Icahn, Southeastern reveal Dell board nominees

Proxy fight looms as maverick investor asked for clarification on recapitalisation plans

Carl Icahn has teamed up with Southeastern Asset Management Inc in a fight for control of Dell Corp.
Carl Icahn has teamed up with Southeastern Asset Management Inc in a fight for control of Dell Corp.

Carl Icahn and Southeastern Asset Management Inc yesterday unveiled their 12 nominees to replace Dell Corp's current board of directors as the company asked for details on the billionaire investor's plan for the future of the world's number-three PC manufacturer, according to a report from Reuters.

Icahn has teamed up with fellow Dell stakeholder Southeastern in a challenge for control of Dell Corp. The duo has tabled a proposal to allow shareholders to retain their stakes, while paying them $12 in dividend for every share held, or awarding additional stock. Under this proposal Dell Corp would remain a publicly traded company.

Icahn also issued a standing pledge that if his proposal is rejected he will drum up support among shareholders to vote down the offer from Michael Dell and Silver Lake Management of $13.65 a share, which would be a straight buyout, leaving the company in private hands and resulting in its delisting from trading exchanges.

As part of this process, Icahn would seek to replace the members of Dell's board in a proxy fight that would see company founder Michael Dell lose his positions as chairman and CEO.

Nominated board members include Icahn himself; Bernard Lanigan Jr, chief executive of Southeast Asset Advisors; Rahul Merchant, New York City's chief information officer; Jonathan Christodoro, managing director at Icahn Capital; Daniel Ninivaggi, president, Icahn Enterprises, who previously sat on the board of Motorola Mobility Holdings; and technology veteran Harry Debes, operating partner with Advent International Corp.

Icahn and Southeastern, who respectively hold 6% and 8.5% stakes in Dell, are thought to be putting up some of their own cash, but will reportedly require a bridging loan of $5.2bn. For this, Icahn is in talks with Jefferies Group LLC, according to a Bloomberg report.

Yesterday, New York-based Jefferies issued a research note in which it suggested that shareholders may favour the Michael Dell-Silver Lake proposal.

"Most shareholders would prefer the certainty of $13.65 in cash" wrote Jefferies analyst Peter Misek. Investors may accept that rather "than risk the uncertainty and the ensuing stock volatility if the Silver Lake proposal were voted down and Icahn and Southeastern attempt to install a new board of directors."

Jefferies handles trades in Dell securities, which it referred to specifically in the note as a "conflict of interest".

Dell's special committee, in asking for clarification on Icahn's proposal, specifically highlighted that his documented plan appeared to ignore the consequences on cash flow of using company funds in the dividend transaction. It also asked for information on the taxation of beneficiaries if they were to receive shares.