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TheStreet Open House

Dell's Wild Takeover Ride Continues

NEW YORK ( TheStreet) - Carl Icahn is reported to have taken a large stake in PC giant Dell's (DELL), a move that may put the activist investor in opposition to the company's proposed $13.65 a share takeover.

Icahn's potential investment adds to a frenetic afternoon for Dell, amid reports from Bloomberg that private equity giant Blackstone Group and competitor PC-maker Hewlett Packard (HPQ) are studying the company's books in its 'go-shop' period. The Wall Street Journal reports some of Dell's most vocal shareholders may be assembling a competing bid to the proposed $24.4 billion takeover.

Citing unnamed sources, CNBC's David Faber reported on Wednesday that Icahn has taken a 100 million share stake in Dell worth roughly $1.4 billion at current market prices, in a holding that amounts to about 6% of the company's outstanding shares.

In taking the position, Icahn is likely to oppose Dell's planned takeover by founder Michael Dell and private equity firm Silver Lake Partners, joining a growing chorus of investors who may not vote for the deal in its current form. Instead, Bloomberg report's Icahn may advocate financing a special dividend payment of about $9 a share.

Southeastern Asset Management, Dell's top independent shareholder with a near 8.5% stake, said in February it would oppose the deal, citing a low-priced bid that it says undervalues the company by roughly $10 a share.

Amid unrest by other investors, T. Rowe Price, Dell's third largest shareholder, also says it will oppose the deal.

"We believe the proposed buyout does not reflect the value of Dell and we do not intend to support the offer as put forward," Brian Rogers, T. Rowe Price Chairman and CIO, said in an emailed statement on Feb. 12.

Given Michael Dell's near 20% stake in Dell and his inability to vote on the proposed $13.65 a share transaction, Icahn's potential opposition to the deal raises the risk that shareholders vote against the take private transaction.

On Wednesday, Dell defended the proposed take-private deal and outlined why it thinks the bidding process has so-far served shareholder interests.

A special committee of independent directors set up to weigh the company's options defended its decision in a statement released early on Wednesday.

"The Special Committee unanimously determined that the sale of the Company would be the best alternative for stockholders," it said. "We negotiated aggressively to ensure that stockholders received the best possible value and agreed to a $13.65 per share transaction that provides value certainty at a 37% premium above the average price for the 90 days before rumors regarding the transaction surfaced."

Boutique investment bank Evercore partners is currently helping the company with a 'go-shop,' in pursuit of a higher priced bid.

Bloomberg reports that Blackstone and HP are both studying Dell's books as part of the Evercore-led process.

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