Activist investor Carl Icahn has built a stake of around 100 million
shares in Dell Inc and wants the personal computer maker to conduct a
leveraged recapitalization, complicating founder Michael Dell's effort
to take the company private, CNBC reported.
Icahn, who is known for
shaking up management, has accumulated a stake in Dell representing 6
percent of the company, CNBC cited sources familiar with the investment
as saying on Wednesday.
That would make the billionaire investor,
known for challenging corporations on their strategy, the next largest
shareholder after Southeastern Asset Management, based on previously
The network reported that Icahn wanted Dell to
take on debt of as much as $9 billion and pay out a special dividend to
shareholders, and will likely oppose the deal.
Shares of Dell closed almost 1.8 percent higher at $14.32.
Icahn did not respond to requests for comment.
arrival on the scene typically puts companies and their boards on
guard, because the outspoken activist investor has a reputation for
aggressively demanding changes by building up stakes in target
Michael Dell has struck a deal to take private the
No. 3 personal computer maker he created in a college dorm room in 1984
and is partnering with private equity house Silver Lake and Microsoft
Corp. But the $24.4 billion deal is being opposed by some of Dell's
major shareholders, including Southeastern Asset Management, which said
the deal substantially undervalued the company.
considered whether to team up with another firm to attempt a counter bid
to Michael Dell's deal, The Wall Street Journal said, citing people
familiar with the matter.
Southeastern has demanded on Tuesday that Dell open its books, signaling it could become more active in opposing the offer.
equity group Blackstone Group is looking at Dell's books as part of the
go-shop period, though the group's interest is priliminary at this
point, a source familiar with the matter said.
Blackstone declined to comment.
special committee of Dell's board of directors said earlier on
Wednesday the pending sale of the PC maker was the best alternative for
shareholders, despite opposition from its largest outside shareholder.
committee, which had been analyzing Dell's situation for more than five
months, said it had also looked at alternatives such as leveraged
recapitalization, changing the dividend policy, selling parts of the
business and working with the company's current business plan.
a billionaire investor who made his name in the 1980s with the hostile
takeover of TWA, is known for his colorful speech - as during his
now-infamous, expletive-ridden on-air spat with fellow Wall Street
player Bill Ackman over the future of Herbalife. He is also famous for
waging fierce battles with company management over what he perceives as
the right corporate strategy.
Some of his recent battles include
an effort to take over truck and military vehicle OshKosh Corp that he
ultimately abandoned, and campaigning for a higher dividend payout from
oil services firm Transocean.
Beyond tender offers and buying up
shares on the public markets, the investor has also resorted to
lawsuits, as in a long-running battle with Hollywood studio Lions Gate.
recently, Icahn chalked up a massive gain after buying a near
10-percent stake in Netflix Inc in September, when he stated flatly that
there were interested buyers for the movie-streaming service waiting in
the wings - which have not emerged.
Icahn's stake in Dell is likely to make it difficult for Michael Dell to buy out the company, especially if he opposes the move.
special committee is currently in the midst of soliciting potential
alternative proposals to Michael Dell's deal. Investment bank Evercore
is conducting that process, which ends March 22.
goal is to facilitate Dell's difficult transition from a commodity maker
of computers into a provider of services to enterprises as a private
company, away from Wall Street's scrutiny.
But since the deal was announced, a number of investors have said the price was too low.
representing almost 14 percent of Dell shares, led by Southeastern with
a stake of more than 8 percent, including options, have said they will
vote against the proposed buyout. The third largest shareholder, T. Rowe
Price, has also spoken out against the deal.
© Thomson Reuters 2013