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Dell Can’t Make Out Icahn’s Proposal

Dell's BoD wants to scope out Icahn’s intentions and see if they’re better than founder Michael Dell’s

Dell’s board has again asked billionaire Carl Icahn and his buddy Southeastern Asset Management for more information about their proposal to take over the company.

Icahn asked Dell for more information after Dell posted its quarterly results last week and Dell flatly said “no.” It wants to scope out Icahn’s intentions and see if they’re better than founder Michael Dell’s.

The board’s special committee, which is weighing offers for the PC maker, sent Icahn a letter Monday saying it can’t figure out if his offer represents a “superior proposal” to Michael Dell and Silver Lake Management’s $24.4 billion leveraged-buyout offer.

It asked Icahn for the “full terms and structure” of his proposal, including details on how he’d finance any deal and the names of a proposed management team since he wants to can Michael Dell right away. “It is not clear to us whether you intend to formulate your transaction as an actual acquisition proposal that the board could evaluate,” the committee said.

It continued, “Unless we receive information that is responsive to our May 13 letter, we are not in a position to evaluate whether your proposal meets that standard.”

On May 13 Dell asked for more information about Icahn’s plan to borrow a wad of money to pay shareholders $12 a share in cash or stock while they kept their Dell positions.

Icahn wants to throw a monkey wrench into Michael Dell’s $24.4 billion offer for the company claiming it’s undervalued.

He only recently bought a stake in the company, which together with Southeastern, another disaffected shareholder bound to lose on the buy-out, represents roughly 13% of the company. His proposal means wracking up more than $5 billion in debt and using up Dell’s bank account while PC sales go down the drain, an estimated nose dive of $10 billion in the next four years.

Dell and Silver Lake Partners are offering $13.65 a share in cash for the joint. They think they can turn the place around and then float it again. Dell is now trading at $13.41.

The committee didn’t specify when it expected an answer from Icahn.

The board is reportedly contemplating scheduling the vote on Michael’s proposal ahead of any stockholder meeting so Icahn can’t attempt a proxy fight for the board, a move that is bound to make it look like Michael stole the company without raising the bid.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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