Dell Inc. (DELL) said Tuesday that the Special Committee of its Board is reviewing the proposal by activist investor Carl Icahn that the PC maker repurchase its shares of about $16 billion.
Earlier today, in a letter to shareholders, Carl Icahn urged Dell to buy back 1.1 billion shares and enable him to become a larger stakeholder.
Icahn also said that he and Southeastern Asset Management would strive to scuttle Michael Dell's buyout offer for the company, and if successful, elect new directors to the board at a shareholder meeting set for July 18. Upon their election, the directors would also embark on a $14 per share tender offer, Icahn said, adding that he and Southeastern would agree not to tender in that offer.
Icahn and Southeastern Asset Management previously proposed that Dell give shareholders a special distribution of $12 in cash or stock per share.
Meanwhile, Dell said that while its Special Commitee would review Icahn's proposal, it opined that this is a further deviation from Icahn's original proposal of a buyout at $15.00 per share and, assuming all shareholders other than Icahn and Southeastern Asset Management tender, appears to equate to a dividend of about $10.00 per share rather than the $12.00 per share promised by Icahn on May 9.
Dell said that Icahn's concept is not a transaction that the Special Committee could endorse and execute - there is neither financing, nor any commitment from any party to participate, nor any remedy for the company and its shareholders if the transaction is not consummated. In addition, the concept does not adequately address the liquidity issues and other risks the Committee previously highlighted.
More than a month ago, the Committee requested financial and other information from Icahn and Southeastern in connection with their previous recapitalization idea. Those requests remain outstanding.
The Committee will consider any and all such information provided by Icahn. However, in the absence of an actionable proposal that would create more value for shareholders, the Special Committee continues to recommend the pending, fully financed $13.65 per share cash sale transaction.
At May-end, Dell's special committee unanimously recommended that stockholders vote to approve the company's $24.4 billion merger deal with its founder CEO Michael Dell and private equity firm Silver Lake, at a special meeting of stockholders to be held on July 18. The deal was initially agreed in February.
Dell filed definitive proxy materials with the Securities and Exchange Commission in connection with the shareholders' special meeting to approve the transaction under which Michael Dell in partnership with Silver Lake will acquire the company for $13.65 per share in cash.
However, two of its largest outside shareholders, Carl Icahn and Southeastern Asset Management Partners, who together own about 13 percent of Dell, decided to vote against the 'going private' deal as it was not in the best interests of Dell shareholders and also undervalued the company.
Icahn and Southeastern also had floated an alternative merger deal that will provide shareholders an option to receive either a distribution of $12 per share in cash or stock valued at $1.65 per share, allowing them to hold on to existing stock.
Further, Icahn and Southeastern also threatened to launch a proxy fight if Dell shareholders were not provided with the opportunity to vote for their proposal side-by-side with the 'going private deal' in a single meeting.
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