Icahn in last-ditch bid to keep Dell gamble going

Fri Jul 12, 2013 11:01am EDT
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By Greg Roumeliotis

(Reuters) - Michael Dell and private equity firm Silver Lake are looking increasingly likely to obtain shareholder approval to take Dell Inc DELL.O private in a $24.4 billion deal. But activist investor Carl Icahn still sees room to gamble.

Icahn, who is Dell's second-largest shareholder after Michael Dell, is now trying to sway investors to vote down the buyout deal by raising his competing offer for the No. 3 PC maker.

If Michael Dell wins, Icahn will go home with a profit of $10.7 million for his troubles, Reuters calculations show. If Icahn wins, he will have a troubled company on his hands to turn around. But if neither happens, the billionaire investor could lose hundreds of millions of dollars.

Representatives of Icahn, Dell and Silver Lake declined to comment.

Icahn's cost basis, which has not been reported before, and his new Dell offer show why the 77-year-old investor is one of the most feared activists in corporate America.

Earlier this week, he urged Dell shareholders to go to court to get a higher price for their shares from Michael Dell. Dell's special board committee as well as legal experts said that strategy was fraught with challenges, such as the risk that the court could decide the shares are worth less than the offer price.

"You know this guy is willing to put up a good fight," said James Cox, a corporate and securities law professor at Duke University School of Law.

Dell faces an uncertain future as sales of personal computers decline steeply and the popularity of tablet computers grows. The company's special committee of the board, which is overseeing the sale process, has repeatedly spurned Icahn's plans to recapitalize Dell and reward shareholders, leaving open the possibility that the shares will plunge if the buyout is voted down. Dell shareholders will vote on the Michael Dell-Silver Lake offer of $13.65 per share on July 18.   Continued...

A Dell computer logo is seen on a laptop at Best Buy in Phoenix, Arizona, February 18, 2010. REUTERS/Joshua Lott