In a bid to thwart Michael Dell’s buyout plan, billionaire investor Carl Icahn said he will come up with a higher offer for Dell Inc. (NASDAQ:DELL) by Friday morning.
In his interview to Bloomberg television, the activist investor Carl Icahn said: “We are going to be coming up with a higher bid tomorrow morning… around $20, buy the stock at $20 and we will give the shareholders a piece that warrant. We think that will make it utterly superior and we will go to the independent board”.
A shareholder meeting to consider Michael Dell’s buyout proposal is scheduled for July 18.
Carl Icahn’s earlier proposal
Earlier, the billionaire investor Carl Icahn and Southeastern Asset Management announced the company’s intention to go for a massive stock buyback paying investors $14 a share and leave Dell publicly traded.
Michael Dell’s proposal
Earlier this year, founder and CEO Michael Dell made the original buyout offer for his company. It involves paying shareholders $13.65 per share and then taking the PC maker private.
Last week, the influential shareholder advisory firm Institutional Shareholder Services (ISS) surprisingly backed the leveraged buyout proposal from Michael Dell and the private-equity firm Silver Lake Partners.
The $13.65 a share proposal from Dell and Silver Lake needs a majority of votes to win, excluding Michael Dell’s own 16 percent stake.
Carl Icahn’s letter to Dell shareholders
In his Thursday’s Schedule 13 D filing, the billionaire investor Carl Icahn highlighted a ‘no-brainer’ exists today at Dell as by owning Dell Inc. (NASDAQ:DELL) and opting for appraisal rights, the shareholders have a rare opportunity to make a profit without taking risk. The letter also clarifies the law provides an opportunity to the shareholders to change their mind up to 60 days after the transaction is consummated.
The letter clarified that shareholders looking to take advantage of appraisal must notify Dell of their intention before the vote on the merger and they must not vote for the merger. The letter thus emphasized that unless a shareholder satisfies both these things, he can’t take advantage of the ‘no brainer’ benefit.
If Carl Icahn’s proposal were to succeed, he should first convince Dell Inc. (NASDAQ:DELL) shareholders to reject Dell’s buyout plan, while also asking the shareholders to support his efforts to gain board control in a proxy contest.