Icahn proposes $14-per-share Dell buyback
Activist investor Carl Icahn on Tuesday said that Dell Inc. should buy back its own stock instead of selling the company to founder Michael Dell and investment firm Silver Lake Partners.
Icahn said in a letter to Dell shareholders that the company should start a tender offer at $14 per share.
Icahn and Southeastern Asset Management Inc., Dell's biggest independent shareholder, had previously proposed that the company give shareholders a special distribution of $12 in cash or stock per share. That would have allowed shareholders to get cash and stay invested in the company.
Dell's board rejected that proposal. Icahn said in Tuesday's letter that he concluded that Dell's board would never accept the proposal over Michael Dell's offer of $13.65 per share in cash.
Icahn said he and Southeastern would not tender into the $14 per share offer. Other shareholders would be able to sell at least 72 percent of their position, he said.
Dell shares rose 7 cents Tuesday to $13.48, a sign investors aren't taking Icahn very seriously and still expect the buyout deal to go through.
Dell has asked its shareholders to approve the offer from Michael Dell and Silver Lake in a July 18 vote.
A special committee of Dell's board reiterated that position Tuesday and said Icahn's latest proposal lacks financing or a commitment from anyone to participate. The proposal "would likely force shareholders to continue to own shares in the highly leveraged company that would result," it added.
Dell and other personal computer makers have seen their sales crumble because of the growing popularity of smartphones and tablets. In May, Dell posted a 79 percent decline in earnings for the most recent quarter.
Michael Dell believes he can turn the Round Rock, Texas, company around by taking it private and diversifying into niches, such as business software, data storage and consulting.