Dell special committee slams new Icahn plan as incomplete

Committee says activist investor's latest proposal lacks adequate financing and a remedy for the company and its shareholders if his proposal were to fail.

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Dell headquarters in Round Rock, Texas.
Dell headquarters in Round Rock, Texas. Dell

The special committee of Dell's board managing the computer maker's effort to go private rejected the latest takeover proposal put forth Tuesday by activist investor Carl Icahn as lacking key details necessary for its approval.

Earlier Tuesday, Icahn proposed in a letter to shareholders that Dell buy back 1.1 billion shares at $14 as an alternative to the plan to take the company private proposed by company founder Michael Dell and Silver Lake Partners. Icahn also announced that he had purchased 72 million Dell shares from proxy fight partner Southeastern Asset Management, making him the second largest shareholder in Dell.

"Mr. Icahn's concept is not, in its present state, a transaction that the special committee could endorse and execute," the committee said in a statement.

The committee went on to say that Icahn's proposal lacks adequate financing, as well as a remedy for the company and shareholders if the transaction failed to be consummated. Icahn's proposal also doesn't adequately address liquidity issues and other risks highlighted before, the committee said.

The committee also noted that the Icahn's current proposal appears to offer shareholders a dividend of $10 rather than a $12 dividend previously promised by Icahn in a May 9 letter to Dell's board of directors. "Icahn's current concept would likely force shareholders to continue to own shares in the highly leveraged company that would result," the committee's letter said.

"The committee will consider any and all such information provided by Mr. Icahn," the letter said. "However, in the absence of an actionable proposal that would create more value for shareholders, the special committee continues to recommend the pending, fully financed $13.65 per share cash sale transaction" proposed by Silver Lake Partners and Michael Dell, who owns about 14 percent of Dell's common shares.

Since Dell's founder proposed taking the company private in February via a $24.4 billion buyout, other investors have argued the deal undervalues the company. Icahn, who opposes the company's plan to go private, entered into a confidentiality agreement with Dell in March that gives him the ability to get a closer look at Dell's financial records and deal directly with the company's board.