Sense of the Markets: Icahn and Founder Go Dutch on Dell
NEW YORK (TheStreet) -- Some of us are old enough to remember that Web 1.0 feeling, when we saw, from far off, that enormous brown (or, conversely, Holstein cow-colored) box almost too big to fit on the doorstep, signifying one, and only one thing — your late 1990s PC has arrived.
And even as the industry is going through double-digit declines in PC consumption, Michael Dell likely has that excited feeling, too. Despite Carl Icahn's attempt to buy the PC maker and even his insistence that he has sufficient financing to compete, the corporate raider may ultimately be content using his position to try and wring a few more pennies out of Dell's (DELL) founder.
Perhaps this was why Icahn was eager to break bread with Michael Dell, according to CNBC, at a meeting roughly two weeks ago (one source said there currently are no more scheduled talks for the two). For someone who once threatened to cast aside the company founder, the activist investor's tune appears to have changed.
After struggling to quickly assemble a financing package and being repeatedly rebuffed by the PC maker's special committee, in the middle of June Icahn said Dell's founder and his private equity partners should bump their offer up to $14 per share. Of course, this was after Icahn partner Southeastern Asset Management Inc. had all but waved the white flag, and sold its shares to Icahn for less than $14 each.It will be difficult to determine whether or not Icahn's proposal is actually superior — Dell's special committee hasn't received anything official from Icahn regarding his financing pitch. And don't expect Dell's special committee to sign off on Icahn's pitch — given the complicated nature of the way Icahn is going about his proposal, that could open up a can of worms over what truly is a superior offer, with Silver Lake Partners LP's entitlement to a breakup fee in excess of a quarter-billion dollars on the line. Of course, if the special committee were to determine Icahn's bid superior, Silver Lake could always come back with a penny or so more bid.
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