Carl Icahn Challenges Dell Stock Purchase -- WSJ
16 October 2018 - 6:02PM
Dow Jones News
By Cara Lombardo
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (October 16, 2018).
Carl Icahn is gearing up for another battle with Michael
Dell.
The activist investor, who fought Mr. Dell when he took his
namesake computer company private in 2013, will challenge plans to
take it public again.
Mr. Icahn on Monday disclosed that he has boosted his stake in
shares that track Dell Technologies Inc.'s interest in VMware Inc.
to 8.3%. He said in a letter that he plans to vote against Dell
Technologies' plan to buy the stock -- known by its ticker, DVMT --
and encourage other shareholders to do the same.
The move represents a serious challenge to a deal that is meant
to streamline Dell's complicated ownership structure and return the
company to the public markets. Several other investors are already
unhappy with the proposal, which Dell and investment firm Silver
Lake announced in July, and Mr. Icahn's public opposition lengthens
the odds of winning shareholder approval.
Mr. Icahn argues that the current deal, which would allow
tracking-stock holders to exchange each share for 1.3665 shares of
what will become a newly public Dell, or $109 in cash,
significantly undervalues DVMT stock.
"I firmly believe Dell and Silver Lake are trying to capture $11
billion of value that rightly belongs to us," he said in an open
letter to other shareholders. Mr. Icahn said he believes DVMT is
worth approximately $144 a share, based on recent DVMT and VMware
share prices. On Monday, DVMT closed up 0.5% at $95.
Dell and the special committee of its board of directors didn't
respond to requests for comment.
The special committee of its board representing DVMT
shareholders previously said it examined several alternatives and
determined the current offer maximizes value.
The deal has been unpopular with shareholders since it was
announced. Holders of around 20% of DVMT -- including Mr. Icahn,
fellow activist Elliott Management Corp., some teams at BlackRock
Inc. and others -- were already considering rejecting it, The Wall
Street Journal previously reported.
While Mr. Icahn didn't initially intend to challenge the deal,
his plans changed as more investors voiced concerns privately to
him, no other large shareholder came forward and he did more
research, according to people familiar with the matter.
He recently boosted his position from 1.2%.
P. Schoenfeld Asset Management LP, which owns a much smaller
DVMT stake, said in a letter made public Oct. 5 that the
consideration should be increased by 20%. Mr. Icahn would be
unlikely to support a deal even at that price, the people said.
Mr. Icahn also said in his letter he is considering making a
competing partial bid to buy DVMT shares, should some holders want
to cash out at a lower price than he feels is fair.
Dell, which has been meeting with investors in an effort to sell
the deal, has said its offer is final. As shareholder
dissatisfaction simmered, Dell interviewed several banks about the
possibility of a straight initial public offering, which it saw as
a backup option should the current deal fail, the Journal reported
last month. But Mr. Icahn and other DVMT shareholders have
dismissed it as an empty threat.
Once the largest personal-computer maker, Dell is now known as
much for its corporate products such as storage, servers and
security software. Its majority stake in VMware is seen as its most
promising asset.
DVMT was created to help finance Dell's 2016 purchase of storage
pioneer EMC. Dell went private in a roughly $25 billion leveraged
buyout in 2013 by Mr. Dell and Silver Lake.
In Mr. Icahn's several-month clash with Dell at the time, the
buyout group eventually marginally increased the price and added a
dividend, prompting Mr. Icahn to relent.
In his letter Monday, Mr. Icahn said he doesn't expect a fast
resolution. "I intend to do everything in my power to stop this
proposed DVMT merger," he wrote.
Write to Cara Lombardo at cara.lombardo@wsj.com
(END) Dow Jones Newswires
October 16, 2018 02:47 ET (06:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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