Icahn to limit Dell stake but can talk with other investors

Activist investor Carl Icahn has agreed to limit his stake in Dell but will be allowed to speak with other investors about a bid to buy the PC maker.

In a filing today with the Securities and Exchange Commission, Dell said that its special committee has reached an agreement with Icahn. The agreement bars Icahn from buying more than 10 percent of Dell's shares or partnering with other shareholders to own more than 15 percent of Dell. However, as part of the pact, Icahn has been granted a limited waiver that allows him to "engage" with other Dell investors.

Dell announced in February that it had plans to take the company private via a $24.4 billion, or $13.65 per share, buyout by its founder and CEO Michael Dell, who owns about 14 percent of Dell's common shares, and private equity firm Silver Lake. Microsoft also kicked in a $2 billion loan.

However, since that time other investors have argued the deal undervalues the company. Icahn is one such investor who has been critical of Dell for its plan to transform itself from a publicly traded company into a privately held one. He entered into a confidentiality agreement with Dell last month that gives him the ability to get a closer look at Dell's financial records and deal directly with the company's board.

Icahn submitted an alternative acquisition proposal, which Dell's special company has determined "could reasonably be expected to result in a superior proposal."

"The special committee believes that granting the limited waiver to Mr. Icahn while capping his share ownership will maximize the chances of eliciting a superior proposal from Mr. Icahn while at the same time protecting shareholders against potential accumulation of an unduly influential voting interest," Dell said today.