Carl Icahn

Dell Committee Claims Icahn Takeover Plan Underfunded

The Icahn proposal offers shareholders an option for a special dividend of $12 per share, but the new analysis said the amount of cash on the table would provide as little as $8.50 per share depending on the number of stock owners who choose to take cash instead of shares.

NEW YORK - A special committee of Dell's board studying a sale of the computer giant said Wednesday the alternative plan from corporate raider Carl Icahn is underfunded by as much as $3.9 billion.

The panel, which has set a shareholder vote for July 18, offered a detailed explanation of its support for a private-equity buyout led by company founder Michael Dell worth $24.4 billion.

In a statement and a regulatory filing, the panel said the private-equity deal "is the best option for shareholders, including the superior value and certainty it provides relative to all alternatives evaluated and its shifting of Dell's business risks to the buyer group."

"We thoroughly evaluated all strategic alternatives and determined the $13.65 transaction [led by Michael Dell] is the most attractive alternative," the filing with the Securities and Exchange Commission said.

Icahn, who joined with investment fund Southeastern Asset management, has proposed an alternative in which Dell (IW 500/20) would remain publicly traded but undergo a leveraged recapitalization with new management.

Icahn and other dissident shareholders, who hold around 13% of Dell shares, called the planned buyout a "giveaway."

But the Dell committee said the Icahn plan has a "$3.9 billion potential funding shortfall."

The Icahn proposal offers shareholders an option for a special dividend of $12 per share, but the new analysis said the amount of cash on the table would provide as little as $8.50 per share depending on the number of stock owners who choose to take cash instead of shares.

Warning: “Valuation Risks”

The committee also warned of "valuation risks" from the extra debt to be assumed under the Icahn plan and "risks and uncertainties of Dell's ongoing transformation, and the potential for adverse perceptions among employees, vendors and customers that could affect Dell's business."

The buyout unveiled in February would provide Michael Dell a chance to reshape the former No. 1 PC maker away from the spotlight of Wall Street.

The move, which would delist the company from stock markets, could ease some pressure on Dell, which is cash-rich but has seen profits slump, as it tries to reduce dependence on the slumping market for personal computers.

Copyright Agence France-Presse, 2013

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