One of the biggest critics of Michael Dell's plan to take the company he founded private has launched a fresh challenge to that $24.4 billion bid and says the slumping PC maker needs new leadership.
Billionaire investor Carl Icahn has teamed with Dell's largest independent shareholder, Southeastern Asset Management, to pitch a deal that would let Dell shareholders keep their stake in the company and give them either $12 per share in cash or additional shares.
Icahn and Southeastern say this alternative, which would keep the company publicly traded, gives shareholders a stake in future company gains, according to a May 9 letter sent to Dell's board.
Dell founder Michael Dell, left, in a Jan. 26, 2011 file photo, and Carl Icahn, in an Oct. 7, 2007 file photo, are seen in a combination photo. Dell's largest independent shareholder has teamed with activist investor Icahn in another challenge to Michael Dell's $24.4 billion bid to take the struggling computer maker private
An investment group led by Michael Dell offered earlier this year to pay $13.65 per share in a deal that would take the Round Rock, Texas, company private. But Icahn said Friday during a CNBC interview that price amounted to a giveaway.
"It's really a travesty," he said. "It's almost like something out of Saturday Night Live."
Icahn and Southeastern heaped more criticism on Dell's offer in the letter. They accused the Dell board of insulting shareholder intelligence by claiming to be focused on shareholders' best interests while accepting Dell's offer to buy the company for "far below what we consider its value to be."
"You not only sanctioned Michael Dell's offer, which amazingly allows him to purchase the company from shareholders with their own money but, to add insult to injury, you have agreed to give Mr. Dell a breakup fee of up to $450 million," the letter states.
A special committee of Dell Inc.'s board said in a separate statement that it is carefully reviewing the proposal from Icahn and Southeastern "to assess the potential risks and rewards to the public shareholders."
Icahn and Southeastern say they would pay for their offer with existing cash from the company and about $5.2 billion in debt, which would be less than Michael Dell's plan requires.
Company documents outlining Dell's buyout proposal state that it would involve a $2 billion loan from Microsoft Corp. and up to $13.75 billion in other debt from lenders.
Southeastern and Icahn said they own about 13 percent of the company's outstanding shares. They want the Dell board to put their proposal before shareholders instead of proceeding with Dell's buyout offer. If the board declines, they want the vote on Michael Dell's buyout combined with the company's annual meeting to elect new directors. Then they'll challenge Dell's board with their own director nominees.
If Dell puts Michael Dell's buyout proposal up for a shareholder vote, Icahn and Southeastern promise to work "assiduously" to convince the other shareholders to reject the bid, which he made with the investment firm Silver Lake.