Icahn signs confidentiality agreement with Dell
By Tom Murphy on March 11, 2013
Carl Icahn, who is fighting Dell Inc. founder Michael Dell's plan to take
the struggling company private, has entered a confidentiality agreement
that would give him access to the computer maker's financial records.
Michael Dell, who is also Dell's CEO, is planning a $24.4 billion buyout
that would make the Round Rock, Texas, company a privately owned business.
But Icahn and other investors say the price of $13.65 per share is too
Icahn's company, Icahn Enterprises, has said it holds a substantial stake
in the company.
Icahn wants the company to pay a special dividend of $9 per share,
financed with existing cash and new debt, if shareholders reject the
The investor told Dell executives in a recent letter that if they decline
to promise this one-time payout, then he wants the company to combine a
shareholder vote on the buyout with its annual election of directors,
In that case, Icahn would nominate candidates who would implement the
special dividend if they are elected, and Icahn and his company could
provide more than $5 billion in loans to ensure prompt payment of the
Icahn wrote in his letter to Dell last week that the PC maker's future is
bright, and all shareholders should benefit from that, not just Michael
Dell. Icahn is known for buying out-of-favor stocks and boosting them by
pressuring or replacing boards of directors, installing new management and
other bare-knuckle tactics.
Analysts say Icahn's entry into the debate over the deal makes it less
likely that shareholders will accept Dell's current buyout offer.
Shareholder Forum, a group that fights for shareholder rights, plans to
demand copies of the same records that Icahn is getting, according to Gary
Lutin, a former investment banker who runs the group. The Shareholder
Forum last week sent a letter to Dell's board seeking access to the
information that influenced the decision to sell the company at $13.65 per
share. The forum wants to bring in independent experts to review whether
the proposed buyout is the best choice for the company and its
Dell appointed a special committee of directors last August after Michael
Dell notified the company that he was exploring a buyout bid in
partnership with other investors. Michael Dell has agreed to contribute
273 million shares of the company stock that he controls and $750 million
in cash to help finance the buyout, which relies primarily on loans from
PC software maker Microsoft Corp. and an assortment of banks.
Dell's special committee has said it already considered a special dividend
during a "rigorous" five-month review that culminated with the buyout
plan. It said last week that it is conducting a search for better
alternatives to the proposed buyout, and Icahn and others are welcome to
Dell shares rose 21 cents to close at $14.37 Monday. Shares of Icahn
Enterprises rose 40 cents to $61.20.
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