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Icahn set to put a spoke in the wheel of Michael Dell’s dream buyout

Carl C. Icahn / Getty

Carl C. Icahn / Getty

/ By Stanley Green /

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Billionaire investor Carl C. Icahn has joined the group who are opposing the $24.4 billion buyout of the computer maker Dell Inc., by its founder and former owner Michael Dell on the grounds that it undervalues the company.

Self-made computer genius Michael Dell certainly put the cat among the pigeons last month when he announced his intention to raise more than $24 billion deal so that he could put together a leveraged buyout of the computer hardware company which he established in 1984 when just nineteen. Always a visionary Michael Dell succeeded in shaping Dell computers into becoming one of the industry leaders before taking his company public in 1996 making himself a very rich man in the process.

Which leads to the question on many people’s lips, which Dell has decided to place his considerable personal fortune back at risk as well as managing to convince some key players in the computer industry such as Steve Ballmer of Microsoft and Larry Ellison of Oracle to take a share in the company if Dell’s dream to take his baby back into private hands comes true. Some say that only a can only be someone who knows the company is intimately as the person who founded it can recognise the fact that its shares are undervalued and the company itself can be taken forward very quickly by making more inroads into the fast developing tablet market and become less dependent on the tabletop and portable computer in which they made their name.

However there are already a number of Dell shareholders who are looking at Dell’s attempts to take his company private in a  less than favourable light. These people, mainly shareholders, are not only asking some leading questions regarding whether Michael’s motivation may be based on picking up his former company at a bargain price and using his personal magic and undoubted abilities to reform to former glories, but at a knockdown price.

Michael Dell / Getty

Michael Dell / Getty

One of these shareholders is billionaire investor Carl Icahn who recently announced that not only had he increased his shareholding in Dell to a significant level but he was making a formal objection to the terms of the proposed $24.4bn buyout.

Icahn has reportedly accused the bidders that their offer for the company was unrealistically low and his preference was to see the company remain public, with Dell back at the helm.  Unofficial reports have it that Southeastern Asset Management, Dell’s largest individual shareholder also share Icahn’s opinions, making for a more difficult task than Michael Dell and Silver Lake his venture capital partners may have expected when they face the company’s shareholders at a special general meeting scheduled towards the end of the month to present their case.

in order for Dell’s deal to go through, it will require the approval of a majority of independent shareholders, we should work out at around 42.5 percent of Dell’s shares since Dell has retained a personal stake in this company of around 16 percent which cannot be taken into account in the vote. With two major shareholders, Southeastern and T. Rowe Price Investors already having stated in public their opposition to the deal and between them having control over more than 14 percent of Dell shares, the odds now seem to be tipping slightly against the proposed privatization, at least according to the current share offer.

Carl C Icahn while preparing to admit that his holdings in Dell were “substantial, ” he did not elaborate on specific figures. In fact Icahn has reportedly signed a confidentiality agreement with Dell with a branded him privy to the company’s books.

While there is much speculation in the industry of what will be the outcome of the forthcoming meeting, most analysts reading between the lines predict that the outcome of Icahn’s intervention may simply to provoke a higher bid from Mr. Dell and his Silver Lake partners more accurately representing the company’s true value, especially with Michael back at the helm.

What has to be taken into account is that apart from the Dell consortium’s interest in a large number of tire kickers and have been taking an interest in the company of late there seems to be no sign of any rival bid to the Dell initiative.

An interesting few weeks look to be in store for Michael Dell before he can achieve his dream to take by the company that he founded and nurtured to international success.




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