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.

The alternatives available to Dell include continuing with or modifying the company's existing business plan, conducting a leveraged recapitalization, changing the company's dividend policy, and potentially selling all or parts of the business.

Still, Dell's board moved forward with the proposed $13.65 a share bid because it was deemed to be the company's best option.

CNBC's report, which cited traders, indicated Icahn has met with Dell's committee and favors leveraged recap over the company to a buyout. Such a scenario would mirror comments made in February by Southeastern Asset Management.

Icahn declined to comment to CNBC.

A February analysis by Jefferies analyst Peter Misek indicates that the proposed $13.65 a share transaction could be raised as high as $15 a share, given the high multiples Michael Dell and his buyout partners could return in the proposed deal.

The prospect that Icahn joins Southeastern Asset Management in opposing the deal would add to a growing relationship between both investors. Still, its unclear whether an alternate bid for all of Dell is emerging.

The Wall Street Journal reports Southeastern may be working on a counter-offer to the proposed $24.4 billion takeover.

Notably, both investors gained seats to Chesapeake Energy's ( CHK) board in activist stakes in 2012. Currently, Icahn is also pressing activist investments in truck maker Navistar International ( NAV) and rig contractor Transocean ( RIG).

The activist is also opposing a short position taken by Bill Ackman of Pershing Square Capital in Herbalife ( HLF), which gave him easy access to the company's board.

A message left for Icahn wasn't immediately returned.

-- Written by Antoine Gara in New York

More from Mergers and Acquisitions

Could Spotify Be Next on Amazon's Wish List?

Could Spotify Be Next on Amazon's Wish List?

Sprint, T-Mobile Might Have to Do More Than Make Promises to Get Deal Approved

Sprint, T-Mobile Might Have to Do More Than Make Promises to Get Deal Approved

Xerox Received Interest From HPQ Before Fuji Deal: Sources

Xerox Received Interest From HPQ Before Fuji Deal: Sources

Divestitures at Newell Expected in Weeks: Wells Fargo

Divestitures at Newell Expected in Weeks: Wells Fargo

In Biopharma M&A, 'Where There's Real Innovation There's Someone Willing to Pay'

In Biopharma M&A, 'Where There's Real Innovation There's Someone Willing to Pay'