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Dell Renews Call for Details on Icahn Takeover Bid

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Dell Can’t Evaluate Icahn’s Proposal Without More Information
On May 13, Dell’s special committee asked Icahn and his partner Southeastern Asset Management Inc. for more information about his takeover plan, which involves borrowing money for Dell to offer $12 a share in cash or stock to investors, while also letting them retain stakes in a public company. Photographer: Sam Hodgson/Bloomberg

May 20 (Bloomberg) -- Dell Inc.’s board reiterated a call for billionaire Carl Icahn to provide more details about his proposal to take over the personal-computer maker, saying it needs more information to discuss his offer.

In a letter to Icahn today, the committee of Dell’s board charged with managing the buyout process by its founder said it can’t respond to the financier and won’t engage in talks unless the board decides his bid could result in a “superior proposal” over Chief Executive Officer Michael Dell and Silver Lake Management LLC’s $24.4 billion leveraged-buyout offer. The letter refers to a May 13 request by the special committee that asked Icahn and his partner Southeastern Asset Management Inc. for details about their proposed plan.

“Unless we receive information that is responsive to our May 13 letter, we are not in a position to evaluate whether your proposal meets that standard,” Round Rock, Texas-based Dell’s board special committee said today.

Icahn’s takeover plan involves borrowing money for Dell to offer investors $12 a share in cash or stock while letting them retain stakes in a public company. The payout would dilute existing Dell shares, which Icahn has said would have a value of at least $1.65 apiece. CEO Dell and Silver Lake are offering to acquire the company for $13.65 a share in cash -- then make it more competitive in private amid a declining PC market.

Dell rose less than 1 percent to $13.41 at the close in New York, or about 2 percent below the Michael Dell-Silver Lake price.

Deal Structure

Icahn, who along with Southeastern owns almost 13 percent of Dell shares, said this month he would look to replace Michael Dell as CEO if he prevails. Financing for Icahn’s proposal will come from existing cash at the PC maker and about $5.2 billion in new debt.

In its May 13 letter, Dell’s board committee asked Icahn for the “full terms and structure” of its proposal, including details on how he’d finance any deal and names of a proposed management team, among other paperwork. “It is not clear to us whether you intend to formulate your transaction as an actual acquisition proposal that the board could evaluate.”

Today’s letter by Dell’s board didn’t specify a deadline for Icahn to respond. Dell is seeking to schedule a shareholder vote on Michael Dell’s buyout offer ahead of the annual shareholders’ meeting, a person with knowledge of the matter said earlier this month. Separating the annual meeting from a vote on Michael Dell’s take-private offer removes Icahn’s ability to start a proxy contest, which he could only start at an annual meeting, this person said.

Bidding Contest

“Is there any reason to refuse to give Icahn information that might help justify a bid that could be superior to Michael’s bid unless you don’t want to see a bid that forces Michael to raise his?” Erik Gordon, a business and law professor at the University of Michigan in Ann Arbor, wrote in an e-mail today. “If you want a bidding contest, you make it easy for bidders.”

Susan Gordon, a spokeswoman for Icahn, and Jed Repko, a spokesman for Southeastern, didn’t respond to requests for comment.

Dell’s board is predicting another year of lackluster growth as demand for PCs ebbs, underscoring the urgency behind the company’s decision to be taken private, documents filed in March showed.

Sales for the year ending next January will slip to $56.5 billion, and Dell’s PC business will shrink by $10 billion over four years, according to projections in a proxy statement filed with regulators.

To contact the reporter on this story: James Callan in New York at

To contact the editor responsible for this story: Tom Giles at

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