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!

Carl Icahn Hunts for Dell Cash In Takeover War

NEW YORK (TheStreet) - Activist investor Carl Icahn is taking a large stake in PC giant Dell (DELL), in a move to get a large cash payout from the struggling PC maker.

Icahn said in a letter to Dell's board of directors that he will propose a debt-financed $9 a share dividend over the company's proposed $24.4 billion takeover from founder Michael Dell and private equity giant Silver Lake Partners.

In a Securities and Exchange Commission filing on Thursday Dell said it had received Icahn's proposal but is recommending the go-private transaction it agreed to on Feb. 5.

"The Special Committee is currently conducting a robust 'go-shop' process to determine if there are third parties interested in proposing alternative transactions that could be superior for Dell's public shareholders to the going-private transaction -- and we welcome Carl Icahn and all other interested parties to participate in that process," Dell said in a Thursday statement.

In his letter, Icahn indicated he's ready to start a proxy battle between Dell and many of its shareholders, who increasingly are in opposition to the $13.65 a share takeover offer. Icahn said his holding company, Icahn Enterprises, is willing to commit $2 billion to a bridge loan to finance the $9 a share special dividend he's recommending for Dell.

The billionaire activist said he's willing to committ a further $3.25 billion in financing for the dividend.

"Rather than engage in the Going Private Transaction, we propose that Dell announce that in the event that the Going Private Transaction is voted down by shareholders, Dell will immediately declare and pay a special dividend of $9 per share," wrote Icahn, in his letter.

The dividend would be Dell's cash on hand, new financing arrangements or the use of accounts receivable from the company's financing arm. Were Dell to block shareholders from voting on his proposal, "we anticipate years of litigation will follow challenging the transaction and the actions of those directors that participated in it,": added Icahn in his letter.

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 joining a growing chorus of investors who may not vote for the deal in its current form.

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.

The investment manager favors a debt financed dividend similar to the transaction Icahn is proposing.

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.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
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 16,493.37 -69.93 -0.42%
S&P 500 1,925.15 -5.52 -0.29%
NASDAQ 4,352.6390 -17.1340 -0.39%

Brokerage Partners

Rates from Bankrate.com

  • 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