Carl Icahn May Walk Away From Dell Proxy Fight He Started
CNBC’s David Faber reported minutes ago that Icahn is getting close to dropping his bid for Dell. What changed? Perhaps it’s the matter of funding. The New York Post reported today that Icahn and partner Southeastern Asset Management are having trouble pulling together the $5.2 billion needed to make an offer that would improve on the $24.4 billion leveraged buyout offer put together by Michael Dell and the private equity firm Silver Lake Partners.
Icahn, the Post said, had told investors that at least part of the delay is addressing the $3.9 billion funding gap called out on June 5 by the special committee of Dell’s board overseeing the go-private process. Icahn and Southeastern proposed last month to recapitalize Dell and pay shareholders a $12 special dividend while leaving a publicly held stub.
One problem is that interest rates have risen a bit in recent weeks, making the prospect of borrowing that kind of money a lot more expensive. The other is that any potential lenders have been looking at the state of Dell’s deteriorating business and found it hard to underwrite a bid for a company with so much risk.
Icahn has — if nothing else — made the Dell situation a lot more colorful. One day he openly proclaimed in a televised rant that he would fire Michael Dell if he were ever to get control of the company. Since then, Icahn has proposed a new slate of directors as well as a short list of CEOs he might like to hire, though at least one of them, Oracle president Mark Hurd, has indicated he’s not interested.
The vote of Dell shareholders on the go-private proposal is set for July 18.