Icahn tries to sway votes against Dell buyout deal
Michael Dell and private equity firm Silver Lake are looking increasingly likely to obtain shareholder approval to take Dell Inc private in a $24.4bn (€19bn) deal. But activist investor Carl Icahn still sees room to gamble.
Mr Icahn, who is Dell's second-largest shareholder after Michael Dell, is now trying to sway investors to vote down the buyout deal by raising his competing offer for the number three PC maker.
If Michael Dell wins, Mr Icahn will go home with a profit of $10.7m for his troubles, calculations show.
If Mr Icahn wins, he will have a troubled company on his hands to turn around. But if neither happens, the billionaire investor could lose hundreds of millions of dollars.
Representatives of Mr Icahn, Mr Dell and Silver Lake declined to comment.
Earlier this week, he urged Dell shareholders to go to courtto get a higher price for their shares from Michael Dell. Dell's special board committee, as well as legal experts, said that strategy was fraught with challenges, such as the risk that the court could decide the shares were worth less than the offer price.
"You know this guy is willing to put up a good fight," said James Cox, a corporate and securities law professor at Duke University School of Law.
Dell faces an uncertain future as sales of personal computers decline steeply and the popularity of tablet computers grows. The company's special committee of the board, which is overseeing the sale process, has repeatedly spurned Mr Icahn's plans to recapitalise Dell and reward shareholders, leaving open the possibility that the shares will plunge if the buyout is voted down.
Shareholders will vote on the Michael Dell-Silver Lake offer of $13.65 per share on July 18.
So far, the odds are favourable that the Michael Dell-Silver Lake team will win shareholder approval, investors say. All three major advisory shareholder firms this week backed the bid to take Dell private.
Mr Icahn and Southeastern Asset Management Inc yesterday said they had sweetened their bid for Dell by adding warrants which they say would increase the value of the offer to a range of $15.50 to $18 per share from $14.