This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Icahn Turns to Roots in $14 a Share Dell Tender

Stocks in this article: DELL IEP CLX LGF CVI

NEW YORK ( TheStreet) - Carl Icahn is turning to his roots in a new $14 a share tender offer for Dell (DELL), as the activist tries to improve upon a $13.65 a share takeover offered by Silver Lake Partners and founder Michael Dell that now has full support from the struggling PC-maker.

Instead of a complicated $12 a share special dividend and a publicly traded stub of Dell shares, Icahn is simply proposing the company's current shareholders hand over their stock to him for 35 cents more than Silver Lake and Michael Dell's takeover offer.

Icahn is offering to buy up to $16 billion in Dell shares at $14 a share, or roughly 72% of the company's total shares.

That is a change from the activist's previous efforts for Dell, such as a proposed special dividend and an equity stub, which seemed to be an elegant solution for some investors such as Southeastern Asset Management to recover losses on their investment in the financially deteriorating PC-maker.

In a sense, Icahn's special dividend and stub offer resembled a leveraged shareholder buyout to counter Silver Lake's private equity LBO, which at $24.4 billion, would be the largest since the financial crisis.

Dell Backs $13.65 a Share Silver Lake Offer, Forcing Icahn's Hostility

According to a letter sent to Dell's shareholders, Icahn is asking current investors to vote against the Silver Lake-led takeover at the company's July 18 annual shareholder meeting and elect a hostile slate of board directors elected by the activist. Those directors will then implement Icahn's proposed $14 a share tender offer for the company's outstanding shares.

In the end, were Icahn to win his tender, the outcome of a tender offer may not differ greatly from his previous special dividend proposals. Icahn will still have the ability to pay out special dividends and up to 28% of the company's shares would remain publicly traded.

To help move along in such a process, Icahn has already agreed with Southeastern Asset Management, a top Dell shareholder, to purchase 72% of the firm's shares. Such a share purchase will make Icahn Dell's top independent shareholder and garner the fund's continued support in opposing the Silver Lake and Michael Dell takeover.

To fund the tender, Icahn outlined financing plans that are similar to his previous efforts at a Dell special dividend.

Icahn will support the tender with $5.2 billion in debt financing, $7.5 billion in cash available at Dell and $2.9 billion in accounts receivable, leaving the PC-maker with nearly $5 billion in excess cash to run its business.

The $5.2 billion of debt financing will be made available to Dell as a bridge loan. Icahn said he is personally willing to make $2 billion available to fund such a commitment and has "a major investment bank" willing to put up a further $1.6 billion.

"To preempt the repetition of the criticisms the Company made regarding our prior plan, we believe the Company will have ample liquidity and capital to make the tender offer and run the business well," Icahn said, referring to a June 5 presentation that indicated the activist's special dividend proposal was woefully short on cash.

Earlier in June a special committee tasked with seeking higher bidders for Dell recommended investors vote in favor of Silver Lake and Michael Dell's takeover at the company's July 18, 2013 shareholder meeting.

"Dell's independent directors unanimously recommend that you vote to approve the transaction by voting FOR the Michael Dell/Silver Lake merger agreement," the special committee said.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,778.15 +421.28 2.43%
S&P 500 2,061.23 +48.34 2.40%
NASDAQ 4,748.3960 +104.0840 2.24%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs