Carl Icahn Updates Dell Deal (Update 2)
Updated from 9:24 a.m. ET to provide analyst comments on the offer in the fourth paragraph.
NEW YORK (TheStreet) -- "Dude, you're getting a better offer."
Activist investor Carl Icahn told Bloomberg Television that he plans to add to his $14 per share offer for the majority of Dell (DELL) by throwing in warrants to sweeten the deal. "We're going to add to the bid tomorrow morning," Icahn told Bloomberg Thursday. Through various vehicles, Icahn owns 8.7% of the struggling PC maker.
In an e-mailed statement to Bloomberg, Icahn has added one warrant for every four shares purchased in the tender offer. The total value to shareholders would be $15.50 to $18 per share.Topeka Capital Markets analyst Brian White believes the offer should add suspense to the upcoming shareholder vote. "We believe Mr. Icahn's deal is credible and provides shareholders with a better offer, which we expect will make the July 18 vote a real cliffhanger," White wrote in his note. He rates shares "buy" with a $15 price target. Icahn is no stranger to putting out news via different forms of media on the Dell deal. He recently joined Twitter, proclaiming his love for the micro-blogging site, and the Round Rock, Texas-based Dell in his first tweet. In an SEC filing, Dell disclosed Icahn's tweet:
Twitter is great. I like it almost as much as I like Dell.— Carl Icahn (@Carl_C_Icahn) June 20, 2013By adding the warrants, Icahn is hoping that arbitrage investors, primarily hedge funds, will be excited for this sweetener. Icahn has said that the major shareholder proxy firms, Institutional Shareholder Services (ISS) and Glass-Lewis are wrong to support the offer from CEO Michael Dell and private equity firm Silver Lake Partners. Many institutional investors, including Southeastern Asset Management, T. Rowe Price, Yacktman Asset Management and Pzena Investments are opposing the offer from Dell and Silver Lake. Combined, these investors own approximately 18% of the company, and may still provide a road block to getting a deal done. It came as a surprise to many that the proxy firms backed the $13.65 per share offer from Dell and Silver Lake. Many were expecting the bid from Icahn, in which he would pay $14 per share for 72% of the company and keep a portion of Dell publicly floated. The offer from Dell and Silver Lake takes the entire company private. Dell, who owns 16% of his company, is trying to take the company private to help turn it around, amid struggles in the PC market. ISS cited the risk of rejecting the offer, and a "meaningful loss of value" as reasons for accepting the lower offer. "After evaluating the risk of accepting the offer -- truncation of value if the business transformation is successful -- versus the risk of rejecting the offer -- meaningful loss of value if the business transformation falters -- ISS recommends clients vote FOR this transaction, which offers a 25.5% premium to the unaffected share price, provides certainty of value, and transfers the risk of the deteriorating PC business and the company's on-going business transformation to the buyout group," the proxy advisory firm said in a statement. Shareholders are scheduled to vote on July 18 on the $24.4 billion buyout. Dell shares were higher in pre-market trading, up 0.26% to $13.38. --Written by Chris Ciaccia in New York >Contact by Email. Follow @Chris_Ciaccia
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