Dell Inc. (NASDAQ:DELL) entered into a deal with activist investor and billionaire Carl Icahn to ensure that Icahn limits his stake in the company to less than 10 percent. As per the agreement, Carl Icahn will also not strike a deal with other shareholders who collectively own more than 15 percent of the shares of PC maker.
In return, Carl Icahn has been allowed, under section 203 of the Delaware General Corporation Law, to engage with other Dell stockholders.
Icahn enterprises issued a notice to Dell Inc. (NASDAQ:DELL) on March 14, 2013, regarding its filing related to early termination of the waiting period as per HSR Act with the United States Department of Justice and the Federal Trade Commission, in relation to the permission needed to acquire up to 25 percent of the outstanding shares in Dell. HSR approved the request of Carl Icahn on April 10, 2013.
The alternative put forward by Mr. Icahn was an acquisition proposal during the “go-shop” process, which was rolled out under the guiding terms of the merger agreement with Michael Dell and investment funds of Silver lake partners along with the special committee of Dell Inc. (NASDAQ:DELL).
Carl Icahn holds $1 billion shares in Dell, and was against the idea along with many shareholders on the proposal, which said Michael Dell and private equity firm Silver Lake will lead the company into private entity.
Southeastern Asset Management said that there were serious mistakes in the proposed leveraged buyout deal laid down by founder and buyout firm Silver Lake by evaluating Dell at $24.4 billion. In the letter published by Southeastern to Dell board of directors, it was mentioned that the deal presented in front of shareholders to accept the $13.65 per share offered by Michael Dell and Silver Lake, is full of flaws and that the special committee of Dell could not come up with all the options.
Carl Icahn, as well as another private equity firm The Blackstone Group L.P. (NYSE:BX), suggested the measures, which would be helpful in keeping part of the company public. Both Carl Icahn and Blackstone engaged into talks regarding working collaboratively.
In early 2000’s Dell Inc. (NASDAQ:DELL) was synonymous with innovation in the PC arena, but the once top notch PC maker is now dwindling and struggling to gain some foothold in the PC market share globally.
According to the special committee, there can be better a proposal put on the table from Icahn after limiting the share ownership and giving waiver. Apart from the hope of better proposal, the agreement with Carl Icahn also ensures interest of shareholders will remain safeguarded against any undue concentration of voting rights with an Individual.