Billionaire Investor Threatens to Derail Dell Buyout


Last month, Dell, Inc. announced a $24.4-billion buyout deal between founder Michael Dell, Silver Lake Partners and Microsoft that would take the company private.

Billionaire shareholder Carl Icahn wrote a public letter to Dell last Thursday opposing the buyout deal of $13.65 per share. He suggested instead that Dell pay a special dividend of $9 in an effort to recapitalize its share price at $22.81 per share.

“We believe, as apparently does Michael Dell and his partner Silver Lake, that the future of Dell is bright,” Icahn wrote, according to The New York Times. “We see no reason that the future value of Dell should not accrue to all the existing Dell shareholders—not just Michael Dell.”

Today, Dell announced that Icahn had signed a confidentiality agreement with the company so that he could look over the company’s private financial information. The confidentiality agreement does not keep Icahn from adding to his stake in Dell, which some estimate to be at about 6 percent of shares.

The Dell committee had previously considered a special dividend but had decided that Michael Dell and Silver Lake’s offer to take the tech company private provided the superior value for shareholders. Some on the committee hope Icahn will make a $15-per-share bid for more of the company’s shares.

Dell has suffered as the PC market has declined in recent years; its Q4 2012 PC shipments dropped by 5 percent from the previous year. The company has made some unsuccessful attempts to transition into business services.

By going private, Dell would no longer be under pressure to respond to shareholders. Also, the company could eliminate of some of its ailing PC business and invest some of its large cash stockpile into business services.

Dell still sells a lot of computers though. The firm brought in revenue of $62 billion last year, despite its sluggish stock performance.

According to The Wall Street Journal, Icahn threatened Dell’s board with “years of litigation” if they didn’t choose the dividend option he proposed. After Icahn signed the agreement, the Dell committee reiterated its commitment to finding the best deal for Dell shareholders.

“Our goal is to determine if there are alternative transactions that could be superior for Dell’s public shareholders to the going-private transaction and to secure the best result for them—whether that is the announced transaction or an alternative,” the committee said in a statement.

Edited by Braden Becker

Contributing Writer

Related Articles

Coding and Invention Made Fun

By: Special Guest    10/12/2018

SAM is a series of kits that integrates hardware and software with the Internet. Combining wireless building blocks composed of sensors and actors con…

Read More

Facebook Marketplace Now Leverages AI

By: Paula Bernier    10/3/2018

Artificial intelligence is changing the way businesses interact with customers. Facebook's announcement this week is just another example of how this …

Read More

Oct. 17 Webinar to Address Apache Spark Benefits, Tools

By: Paula Bernier    10/2/2018

In the upcoming webinar "Apache Spark: The New Enterprise Backbone for ETL, Batch and Real-time Streaming," industry experts will offer details on clo…

Read More

It's Black and White: Cybercriminals Are Spending 10x More Than Enterprises to Control, Disrupt and Steal

By: Cynthia S. Artin    9/26/2018

In a stunning new report by Carbon Black, "Hacking, Escalating Attacks and The Role of Threat Hunting" the company revealed that 92% of UK companies s…

Read More

6 Challenges of 5G, and the 9 Pillars of Assurance Strategy

By: Special Guest    9/17/2018

To make 5G possible, everything will change. The 5G network will involve new antennas and chipsets, new architectures, new KPIs, new vendors, cloud di…

Read More