Last week, Carl Icahn (right) and Southeastern offered $US12 in cash per share or additional shares to existing investors as an alternative to Michael Dell's $US24.4 billion bid to take the company private. Photo: AP
Dell special board committee on Monday asked activist investor Carl Icahn for details of his plan to buy the computer maker, including how he would finance a cash payout to shareholders and who would run the company if his preferred slate of board directors was installed.
Icahn and Southeastern Asset Management, his ally in a battle with co-founder Michael Dell over the future of the world's No. 3 PC maker, later on Monday revealed their 12 choices for a future company board.
Last week, Icahn and Southeastern offered $US12 in cash per share or additional shares to existing investors as an alternative to Michael Dell's $US24.4 billion bid to take the company private. And the billionaire investor warned that if his leveraged recapitalisation proposal was rejected, he would rally shareholders to vote down the Dell founder's offer and put up his own roster of candidates for the board.
Icahn's plan assumes that only as much as 80 per cent of the company's shareholding will opt for a cash payout, translating into a maximum outlay of $US16.8 billion.
Michael Dell, major shareholders such as Southeastern and Icahn are waging a battle over the future of the company, once a tech-industry high flyer but now struggling to evolve as people embrace smartphones and tablet computers.
Michael Dell and private equity firm Silver Lake want to take the company private for $US13.65 per share, but stockholders, including Southeastern and T. Rowe Price Group, have complained that offer severely undervalues the company.
Instead, Icahn and Southeastern, two of Dell's biggest investors, proposed to give stockholders $US12 cash or shares for every share they own, as well as allow them to keep their stock.
The alternate board proposed by the two groups includes Icahn; Bernard Lanigan Jr., chief executive of Southeast Asset Advisors: Rahul Merchant, New York City's chief information officer, and Jonathan Christodoro, managing director at Icahn Capital.
Shareholders last week welcomed the alternative proposal, which they said sustained a discussion around Dell's future. But investors might find the latest option on the table unpalatable because of a lack of specifics, some analysts say.
"Most shareholders would prefer the certainty of $US13.65 in cash rather than risk the uncertainty and the ensuing stock volatility," Jefferies & Co analyst Peter Misek wrote in a Monday research note. "Our estimates point to possible minimal upside ... to the $US13.65 Silver Lake offer, which we do not think would warrant the potential volatility."
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