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War of words over Dell buyout grows more heated

War of words over Dell buyout grows more heated 

They are offering to acquire Dell, Inc. for $13.65 per share in cash. Carl Icahn, the second largest stakeholder in the company, recently attempted to block Dell and Silver Lake’s offer by proposing a $14 a share buyback program, with a warrant that allows stockholders who hold onto their shares to buy more shares once the stock rises in price. 

The battle for Dell, Inc. began in February of this year, when the company announced that it would be acquired by its founder and Silver Lake Partners. One month later, Icahn sent a letter to the board of directors urging them to pursue a leveraged recapitalization. At the end of March, Icahn and another group led by Blackstone Management Partners each submitted alternative acquisition proposals. Ultimately, the group led by Blackstone Management Partners withdrew its proposal. Although Dell, Inc.’s board of directors stated its intention to fully investigate all acquisition proposals, it was an early champion of Dell and Silver Lake’s bid. 

Icahn has not backed down from his bid to take Dell, Inc. private. He has launched an aggressive campaign to promote his proposal, including writing letters to Dell, Inc.’s stockholders encouraging them to choose his proposal instead of Dell and Silver Lake’s. In response, Dell, Inc. has issued statements expressing concern for the viability of Icahn’s proposal. Icahn fired the latest salvo in this battle, publishing a letter this morning to Dell, Inc.’s stockholders accusing the company’s founder and Silver Lake of “scare tactics” to dissuade voters from choosing his bid. “It seems to me that the Dell Board has shamelessly attempted to frighten stockholders throughout this process,” he wrote. Icahn’s most recent claim is that Dell is trying to sell his company for less than it is actually worth. Shortly after Icahn published his letter, Dell, Inc.’s stock price dropped 0.6%.

Analysts have expressed support for Dell and Silver Lake’s buyout plan. At the end of last week, Institutional Shareholder Services (ISS), the biggest shareholder advisory firm, endorsed Dell and Silver Lake’s proposal over Icahn’s. ISS cited the certainty of value Dell and Silver Lake’s all cash offer provides as well as the transfer of risk from stockholders to the new buyers. Egan-Jones Proxy Services and Glass, Lewis & Co. also recommended that stockholders vote for Dell and Silver Lake’s buyout deal.{mospagebreak}Some industry experts are even speaking out against Icahn’s buyout bid. Tim Bajarin, president of the technology consulting firm Creative Strategies Inc., wrote in a editorial that he believes Icahn “truly understands what it takes to compete in the fast-paced tech market.” Bajarin opined that Dell, Inc.’s chances of success will improve if the company stays unified, and he predicts Icahn will break down Dell, Inc. into separate companies, given his past. 

Dell, Inc. will host a shareholder meeting on Thursday morning at its Texas headquarters to vote on the privatization proposal. 

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