Southeastern Asset Management
Michael Dell

Carl Icahn and Southeastern Propose Alternative Offer To Michael Dell’s Buyout

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Dell shareholders Carl Icahn and Southeastern Asset Management have teamed up to propose an alternative offer to founder Michael Dell’s $24.4 billion leveraged buyout deal.

According to correspondence obtained by the Wall Street Journal, Icahn and Southeastern say they would give Dell shareholders the option to continue holding stock in the company and take an additional $12 a share in cash or stock.

Southeastern is Dell’s largest shareholder with a 8.5 percent stake. Icahn and Southeastern currently hold a combined 13 percent of Dell’s stock, while Michael Dell and his partners hold about 16 percent.

Carl Icahn has sought to overturn Michael Dell’s bid to take the company private since March. The activist investor, who owns a $1 billion stake in Dell, originally said he was open to a partnership with Blackstone Group after the private equity firm made its own separate bid for the PC maker. Blackstone Group backed away from its offers last month, however, citing Dell’s “deteriorating” business. Dell’s operating margins and sales have been hurt as demand for PCs drop.

Michael Dell and Silver Lake agreed in February to buy out shareholders at $13.65 a share. Icahn and Southeastern are among several major investors who say that Michael Dell and Silver Lake’s offer undervalues the company.

In the letter seen by WSJ, Icahn and Southeastern also brought up the possibility of replacing Michael Dell and other members of Dell’s board and management.

“You now have the opportunity to ameliorate the damage we believe you have caused to Dell and its shareholders by following the fair and reasonable path set forth in this letter,” wrote Icahn and Southeastern president G. Staley Cates.