Will Carl Icahn’s New Financing Win Him Dell?
Carl Icahn is proceeding at full throttle. According to the New York Post, the billionaire investor has landed a new financing package that he will use in his effort to snatch Dell Inc. (NASDAQ:DELL) from the hands of founder and CEO Michael Dell. The extra cash will allow Icahn to back up his offer that tops Dell’s price for Dell shareholders and would keep the company publicly traded.
The Post report cites a source involved with the transaction, and places the loan at a value of $5.2 billion. Icahn would use the money and add to it cash in company coffers — plus loans taken on incoming funds — to deliver his price of $14 per share. (Michael Dell, along with Silver Lake, has an offer of $13.65 on the table.) Icahn’s proposal would keep the company public and allow stockholders to keep shares, in effect giving them over $17 per share. His plan would cover 60 percent of Dell.
The board of Dell has backed Michael Dell’s proposal from the start, leaving Icahn to wage his battle on a separate front. Together with Southeastern Management, Icahn’s team controls some 13 percent of Dell. The billionaire has mentioned he plans to appoint a new board at the July 18 shareholder meeting and deliver his offer. How he will raise the $15 billion has been in question.
The $5.2 billion loan has a six-year term, according to the Post, but represents only half the cash Dell is said to have on hand. Michael Dell’s offer for $24.4 billion is for all stock out of his control and would take the company private. This option has been opposed by Icahn and Southeastern ever since it was introduced months ago.
Icahn won’t be stopping there, according to reports. If need be, he plans to raise his bid and give shareholders even more value for stock, along with the opportunity to hold a stake in the new company.
Icahn believes the PC business is far from dead. Of course, he would need Dell’s current chief executive out of the way if he wanted to execute the strategy of his choice. Icahn recently joined Twitter to express his love for the company. His first tweet presented the battle with a dose of levity.
“Twitter is great,” Icahn wrote. “I like it almost as much as I like Dell.”