Investors pushed Dell Inc.'s stock price to $14.32 a share Wednesday -- well
above the price offered in a proposed buyout -- as reports surfaced that
activist investor Carl Icahn has acquired about 100 million shares of Dell
The news about Icahn, first reported by television network CNBC, appeared to have complicated the $24.4 buyout deal accepted by the company's board Feb. 5. That offer is led by company founder and CEO Michael Dell along with Silver Lake Partners, a California-based investment company.
Several major investors have objected to the price of the offer, $13.65 a share. Those disgruntled shareholders include Southeastern Asset Management of Memphis, Dell Inc.'s largest outside investor, which has said publicly it will fight the buyout deal as it presently stands. Another major shareholder opposing the deal is T. Rowe Price Group.
Icahn, a high-profile activist shareholder, has repeatedly challenged companies on their business strategy. If Icahn has acquired 100 million shares of Dell stock, that would give him about a 5.7 percent ownership stake in the company.
Dell Inc. presently is in the "go-shop" period, in which the special committee of the company's board of directors actively seeks a better offer for the company.
Southeastern Asset Management on Tuesday demanded that Dell turn over a complete list of shareholders as well as more financial details relating to its various business segments. The Wall Street Journal also reported that Southeastern Asset Management has considered whether to join with another firm to proposes a counter-offer for Dell.
Bloomberg News also reported that Dell has attracted interest from computer rivals Hewlett-Packard Co. and Lenovo Group as well as the Blackstone Group private-equity firm. Blackstone employs Dave Johnson, who left Dell in December after heading the company's business acquisition effort for more than three years.
Several stock analysts have said that the buyout group will probably have to raise its price in order to get the deal approved by shareholders.
Technology analyst Patrick Moorhead said HP and Lenovo have probably become involved "to mess the deal up and make it more expensive and harder for Dell to go private.
"The Icahn thing is purely to make some money (if and when the buyout group raises its offer price.) He sees this as an opportunity to make money off the spread. He has no strategic reason to be investing in Dell. but he can make life difficult for companies and become a major disruptor," Moorhead said.
"This complicates things for the buyout and it takes things over the top in terms of the circus atmosphere," Moorhead said. "They are absolutely testing Silver Lake's and Michael Dell's resolve on this one."
The special committee to the Dell board of directors, which is guiding the company through the buyout, issued a statement Wednesday, saying that it had taken five months to evaluate the company's risks and opportunities and consider strategic alternatives.
Those alternatives considered included possibly "selling all or parts of the business," changing the dividend policy or conducting a "leveraged recapitalization of the company."
"As a result of the process, the Special Committee unanimously determined that the sale of the company would be the best alternative for shareholders. We negotiated aggressively to ensure that stockholders received the best possible value," the statement said.
The committee also insisted that the buyout must receive approval from a majority of the shares not held by Michael Dell and other members of the company's management.
The "go-shop" period concludes March 22, but the committee said it will continue to negotiate with would-be buyers past that date "if a potentially superior proposal emerges."
"The Special Committee has worked hard, and continues to work hard, to produce the best outcome for Dell's shareholders," the statement said.
The committee is chaired by Alex Mandl, a former telecommunications executive and includes three other independent board members.
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