Feeds

Carl Icahn may be planning to block Dell buyout

Has gobbled up 100 million shares in two weeks

  • alert
  • submit to reddit

Remote control for virtualized desktops

A new potential opponent to the proposed leveraged buyout of Dell by founder Michael Dell has emerged, in the form of none other than corporate raider activist investor Carl Icahn.

On Wednesday, the special committee of Dell's board appointed to investigate the deal declared that selling the company would be the best option for its investors, despite the objections of Southeastern Asset Management (SAM), Dell's largest single shareholder.

But CNBC now reports that Icahn, who has reportedly been buying up Dell shares over the last two weeks, also opposes the $13.65-per-share buyout. He has already met with advisors to the board's special committee to propose a rather different course of action.

According to sources, the former junk-bond juggler is likely to propose an alternative leveraged recapitalization plan that would pay shareholders – not least of which, Icahn himself – "a significant one-time dividend."

The special committee had reportedly considered a leveraged recap among various other options but rejected the idea as being too risky.

Whether Icahn actually has enough clout to pull off such a maneuver is unclear. But those same Wall Street gossips say his recent buying spree may have already amassed him a position close to 100 million Dell shares, which would give him approximately 6 per cent ownership of the company.

If that is the case - and Icahn teams up with SAM to oppose the current plan - their combined 14.4 per cent stake in the company could give them enough influence to convince a significant number of shareholders to join their cause.

Another large shareholder, T. Rowe Price, has also publicly opposed the proposed leveraged buyout plan, according to The New York Times.

But rejecting the buyout would require a vote by the majority of shares not currently owned by Michael Dell, and Dell is believed to control as much as 16 per cent of the outstanding issue – although he will not get to cast a vote himself.

Icahn has built a reputation for manipulating companies for his own short-term gain, beginning with his hostile takeover of TWA in 1985. The airline was carrying nearly half of all trans-Atlantic passengers at the time, but it was forced into bankruptcy seven years later.

If investors were worried about Icahn's involvement with Dell, however, they didn't show it. The company's shares were up 1.8 per cent by the closing bell on Wednesday, and crept up further in after hours trading. ®

Internet Security Threat Report 2014

More from The Register

next story
MI6 oversight report on Lee Rigby murder: US web giants offer 'safe haven for TERRORISM'
PM urged to 'prioritise issue' after Facebook hindsight find
Assange™ slumps back on Ecuador's sofa after detention appeal binned
Swedish court rules there's 'great risk' WikiLeaker will dodge prosecution
NSA mass spying reform KILLED by US Senators
Democrats needed just TWO more votes to keep alive bill reining in some surveillance
'Internet Freedom Panel' to keep web overlord ICANN out of Russian hands – new proposal
Come back with our internet! cries Republican drawing up bill
prev story

Whitepapers

Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Driving business with continuous operational intelligence
Introducing an innovative approach offered by ExtraHop for producing continuous operational intelligence.
10 threats to successful enterprise endpoint backup
10 threats to a successful backup including issues with BYOD, slow backups and ineffective security.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?