Dell Special Committee slaps Icahn’s new proposal as incomplete, risky

This didn’t take long. Today, following the announcement of new proposed deal for Dell by Carl Icahn, the company’s Special Committee has responded with a terse statement that calls what Icahn has put forth all but unserious.

The deal is simple to understand, as Arik Hesseldahl of AllThingsD reported moments ago: “Icahn proposed that Dell offer to buy back as many as 1.1 billion shares of the company in a self-tender offer, at a price of $14 a share.” Icahn will also pick up half of Southeastern’s stake in Dell.

The Special Committee has a number of problems with Icahn’s newest idea, but many appear to reflect earlier concerns: “Furthermore, as in the May 9 letter, Mr. Icahn’s current concept would likely force shareholders to continue to own shares in the highly leveraged company that would result.” The concept would see “Dell pursue a self-tender for its shares of approximately $16 billion,” and would in effect “equate to a dividend of approximately $10.00 per share.”

Given the above concerns, the new deal is “not, in its present state, a transaction that the Special Committee could endorse and execute” as it currently enjoys neither “financing, nor any commitment from any party to participate, nor any remedy for the company and its shareholders if the transaction is not consummated.”

The zingers continue: “the concept does not adequately address the liquidity issues and other risks the Committee previously highlighted. […] More than a month ago, the Committee requested financial and other information from Mr. Icahn and Southeastern in connection with their previous recapitalization idea. Those requests remain outstanding and are equally relevant to this latest concept.” Ouch.

At a minimum, Michael Dell and Silverlake, the proposers of the $13.65 per share deal, have their money in place.

Icahn does not appear close to offering a functional deal that could compete with what has currently been accepted by the company’s board. Perhaps Icahn is stalling in hopes that the extant deal is sweetened to make him go away. I doubt that will work.

Top Image Credit: Jo Jakeman