(Corrects first paragraph to latest major shareholder, not
second major shareholder)
* Icahn proposes leveraged recapitalization, special
* Asks board to implement his proposal to "avoid proxy
* If board refuses, Icahn says will run slate of directors
* Dell shares up marginally in pre-market trading
By Sruthi Ramakrishnan
March 7 Dell Inc shareholder Carl Icahn
proposed the No. 3 personal computer maker pay out $15.7 billion
in a special dividend, becoming the latest major investor to
oppose a plan by founder Michael Dell to take the company
Icahn, known for shaking up management of the companies in
which he invests, wrote to Dell's board to propose a leveraged
recapitalization and said that the $24.4 billion go-private deal
"substantially undervalues the company".
In the letter, dated March 5 and published on Thursday in a
statement by the Special Committee of the Board of Directors of
Dell, Icahn said his interests held a substantial stake in Dell.
He did not disclose his exact shareholding.
CNBC, citing unnamed sources, reported on Wednesday that
Icahn had accumulated about 6 percent of Dell's shares.
That would make him the third-largest shareholder after
Southeastern Asset Management and Michael Dell himself, based on
Southeastern Asset Management, run by activist investor
Mason Hawkins, also opposes the deal. It has said Dell could
borrow money to make a major share repurchase, or break up the
company and sell off its units separately.
Icahn proposed a special dividend of $9 per share, which
would include $4.26 per share derived from $5.25 billion in new
He said the special dividend, when added to a "stub" value
of $13.81 per share, would deliver a total value of $22.81 per
share to shareholders - a 67 percent premium to the go-private
Dell said that Icahn had asked its board to commit to his
proposal, in case the go-private deal is voted down by
shareholders, to "avoid a proxy fight".
"We see no reason that the future value of Dell should not
accrue to ALL the existing Dell shareholders - not just Michael
Dell," Icahn wrote in the letter.
Michael Dell, who has teamed up with private equity firm
Silver Lake and software maker Microsoft, is offering
$13.65 a share to buy out the company.
Dell shares closed at $14.32 on the Nasdaq on Wednesday and
were marginally higher before the bell on Thursday.
Dell said it would welcome Icahn's participation in a
"go-shop" process to find alternative proposals, which the
company announced on Wednesday.
Icahn said that if his ideas were not accepted he would
propose directors who would implement his plans.
He requested that the Dell board combine the vote on the
go-private transaction with an annual meeting to elect a new
board of directors.
Dell has said it would hold the meeting for the vote on the
go-private deal in June or early July.
If the board were to decline to combine the vote, Icahn said
he anticipated "years of litigation will follow challenging the
transaction and the actions of those directors that participated
Icahn Enterprises LP would provide a $2 billion
bridge loan for the "prompt payment" of the dividend, if his
slate of directors was elected, Icahn said in the letter.
Icahn himself would provide an additional $3.25 billion
bridge loan to Dell if necessary, he wrote.
(Editing by Supriya Kurane and Robin Paxton)