Does Icahn Really Have a Chance to Buy Dell?

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Icahn knows he does not have much of a chance to get Dell (NASDAQ:DELL), so he is improving his offer in an attempt to turn more votes against the buyout offer from Michael Dell. Icahn had already offered $14 per share along with the promise that he and Southeastern Asset Management would not sell in.

Now though Icahn has also offered a 7-year warranty for every four shares. It would also allow shareholders to buy back in for only $20. This would put the value of each share at more than $18 per share, although it would be less if Dell tendered his shares.  The buyout offer from Michael Dell is at $13.65 per share.

Icahn’s improved deal suggests he knows he is losing. Although Icahn only needs 42 percent of the shareholder vote to prevent Dell’s offer, so far only 20 percent has backed him. That figure includes Icahn and Southeastern Asset Management’s stakes. The top three shareholder advisory firms also back Dell’s offer.

One reason Icahn is pushing for his deal may be that he could lose money if it does not work out. According to Reuters, if Icahn’s deal goes through, he will get a $10.7 million profit. Most of that is due to purchasing 72 million shares from Southeastern Asset Management.

Although Icahn could make a good profit, that does not take into account his expenses. It is unsure how much Icahn has spent, but it could wipe out his profit. If he doesn’t get the deal, he would still have to cover these expenses as well. Icahn’s chances are not looking good, but he is not giving up yet.

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