Will Carl Icahn’s Strong Play Win Him Dell?

The battle for Dell (NASDAQ:DELL) is still raging. Billionaire Carl Icahn has come up with another proposal as an alternative to founder Michael Dell’s deal and is loudly pushing for his strategy in public and in private. Icahn’s proposal involves a lot of debt while keeping the company public, and offers cash to investors plus the chance to keep their shares of Dell stock.

Icahn’s deal would give investors $12 per share of Dell while allowing them to keep their stock in the company, which would remain publicly traded. There would be over $5 billion in debt attached, about 40 percent of which Icahn would put up himself. Michael Dell and his team from Silver Lake are offering $13.65 per share in cash to take the company private. Icahn’s previous proposal — of $15 per share for 58 percent of the company — had higher numbers attached but did not win over enough support to close the deal.

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The billionaire, who holds about 4.5 percent of Dell stock, is launching his latest aggressive bid with Southeastern Management, which holds a little over 8 percent of the company. Icahn filled the airwaves with tough talk on Friday, telling CNBC the Dell/Silver Lake bid was “a great giveaway” and suggesting there was no contest between his offer and the one originating from the company’s founder…

“You could look at it real simplistically and not have to do a hell of a lot of work to know that the shareholders in this case are literally getting screwed,” he told the hosts of CNBC’s “Fast Money.” In Icahn’s view, the assumed $1.65 per share value of Dell stock would be far more valuable to investors in the long run. In essence, he’s asking investors to take $12 and bet on getting significantly above the $13.65 mark, as opposed to settling for $13.65 in cash from Dell and Silver Lake.

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“In this case, I’ll tell you the deal is worth more than $1.65,” Icahn continued. Citing his success in the RJR Nabisco deal in the 1990s, Icahn suggested the path to greater financial gain was through his plan. He also made sure to disparage those criticizing his interest in buying and turning around a beleaguered Dell. When asked about hedge fund player Jim Chanos and his dismissal of Dell’s potential, Icahn was curt: “I don’t see Jim Chanos on the Forbes 400.” Will shareholders buy the Icahn vision?

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