Carl icon --carl icahn told shareholders to exercise their appraisal rights.
This is to determine the true price of the company.
This could be above or below michael dell's offer.
The 60 day window to drop the appraisal means that shareholders could have their cake and eat it too.
He wrote -- he is joining us right now.
Always good to talk to you.
What makes you convinced that this is a no-brainer?
We look for these.
In this case, if you go for the rights, you will have literally a free put until december because they themselves have said that they will not be able to close this until sometime in october and even then, it might be optimistic.
Therefore, if you go for appraisal rights, you have 60 days after the time it consummates to pull out if you want to.
Sometimes, good things happen and the company would want to get rid of these appraisal rights that make a different deal with you.
Also, you might want to continue to go and get the appraisal rights adjudicated because i think that dell is worth at deal more than the $13 60 five cents that michael dell is offering.
You have the 60 days.
What would cause you and other investors to withdraw their appraisal rights after they have exercise them?
You have not exercised them.
That is my whole point.
I have until december.
If you go for appraisal rights, you don't have to exercise them and go to court, you can just say i've decided to change my mind and take the money.
It is basically a free put.
What is the opportunity?
Well, for one thing, you might have dell before that time is over, not to want to have to go through it.
That has happened many times.
That can give you a premium.
Another thing might be is that you really do, i think it is worth more, but obviously that could change.
That is a long time.
You can see how well hewlett- packard is doing.
So, you can decide during this time whether or not you really want to go through with them.
One of the reasons i would imagine that michael dell and silverlake would not want to have that appraisal rights issue hanging over their head is because they would have to go to the court and it would come down to one single judge making the decision on the evaluation.
They might say that the company is worth a $20 a share, all of a sudden they are playing a very -- paying a very different price for the company.
Aren't you taking a similar risk because that same judge could say, we think it is worth less?
Usually, the history of appraisal rights is that you get more.
I want to make the point that you can make that decision sometime before the end of the year and my opinion.
You don't have to take the risk but you still might get the reward.
That is why it is a great risk reward ratio.
We have made fortunes over the year.
It is amazing that a lot of people don't do it because it does not appear obvious that you cannot possibly make money.
You could do convertible bonds against the short position on stocks and you had no risk.
When the market row, you made a fortune.
-- when the market broke, you made a fortune.
These are no-brainers.
I will be talking about them from time to time and i mention them in my twitter account.
This i will try to get a little bit of a advice.
You can follow him there on twitter.
How about making me your first.
I will make you my first one.
Maybe my second.
No fair, no fair, i want to be first.
You will have some ideas out on twitter.
Let's get back to tell.
What do you think that michael dell and silverlake could do to make you feel like you are getting the right amount of money for this company right now?
A lot has been said , we are only looking for a bump.
We are looking for a fair price.
I really do like this company.
We have put up $5 billion one way or another.
Obviously, i think that iss has read this completely wrong.
They drank the kool-aid that michael dell put out saying that how bad this company is, the risk.
If you don't go for this deal, you have this gap.
Between getting this money from carl icahn and you have to worry about that.
I don't think that anyone questions my credibility.
This it would come up after we have the money, we will do it.
We have never promised the deal we did not deliver on.
I think that they have completely misread this.
Ironically, this is a lot less than the time that you have to wait to get money if you go with the dell deal.
You have to worry about china.
You have to worry until october.
I think that china will go through.
You have to worry.
There will be a bigger gap until you get the dell deal.
Then, will he when the proxy fight?
The point is very simple.
I have a very good record.
I think i have great credibility.
I think that i will buy it and put up the money.
Why would anybody vote for dell?
Unless he comes up with a superior recap to mind, might recap is saying that we will give you $14 and then we have to stop.
By the way, you heard it first on this program, we are going to be coming up with a higher bid by tomorrow morning.
You are coming up with a higher bid?
A higher bid by tomorrow morning.
A little bump on my part, that is what i am looking for.
You are giving us $14. you have a 73% taking.
I think this is superior to the 1465. -- 14.65. we will add to that bid.
We will add a warrant to that.
The bid will be superior , even what is superior.
We are giving $14. they are 75%. then they will own the stub or 25% of the stock.
We think it is worth more than 14. we will do a warrant which will be valuable.
This is vastly superior to the dell deal.
We take umbrage with the iss.
I think that this was just -- this is iss , if your ceo is willing to buy your falling knife for the privilege of catching it, there is probably a price at which you should let him.
Dell has no future at all.
If you respect them, they claim to be.
They are drinking the kool-aid that dell tells them.
In the pc area, this is the second change going on.
Dell will be able to take advantage of that.
That is why we have such a great record.
You don't have to look quarter to quarter.
In fact, you don't make money for that.
Dell has made 14 billion in acquisitions over the last few years.
Dell is in a great position to take advantage of the secular change going on, in our opinion.
At the risk of being a modest, i have been right a lot more than i have been wrong.
We bought oil at 2000 when nobody liked it.
I don't have to prove my record.
I got to say one thing.
Lex you are up 1200%? yes.
So, therefore, i am better qualified to say what a falling knife is and i say that with all respect.
Let's go back to this deleware issue.
This has known to be unpredictable.
If you're in a situation, you are waiting for them to come through in that appraisal.
That is something that could theoretically take a lot of time.
There are a lot of smart professionals that do this and tie it up.
I spoke to one this morning that is pretty big.
They have done a great job.
They have done a good job of going in and getting these appraisals.
Especially in this case, which is unique.
You have a company out there that is just badmouthing this company and is paying 13.65. if you really dig into it, i believe it is worth more than that.
You could argue with that.
They will pay you interest.
When the appraisal is done, i think you get about an eight percent on that money.
By the way, there are many banks that will loan you.
That means that you don't get liquidity.
So, there was a lot of various guys that have made a great deal of money doing this.
In this case, it is a no- brainer because you don't even have to do the appraisal, you can wait until december.
So, that is why i say this is a good thing to do.
I am not telling you go by dell.
I am not here to say go.
You say that it is an embedded put option.
You are buying more time to get a higher profile.
The chancellor of the court already dismissed complaints of an unfair option that happen as we all know about a month ago.
You are effectively putting yourself in his hands to run the appraisal process.
He is a respected judge.
He said he would not give expedited discovery concerning whether the auction was fair or not.
This has nothing to do whether it is fair or not.
That is a different case.
We are saying, we think it is worth more.
It is a completely different question.
You might not get the judge but the perception is that even though it is a completely different case, maybe he is your tight enough that somehow he does not look at it as objectively as one would want.
There are different cases.
What happens to all of those institutional investors that need to be invested in public companies.
Once this is taken private and all they really have essentially is the right to an appraisal claim, would they be able to stay in that?
I will not say this is for everybody.
There are institutions that will do this.
That does not mean that it is not a good thing to do.
It almost makes it easier for the company to make a deal and a settlement when there are not that many appraisals in there.
So, and other words, this is not for everyone.
That almost makes it more exciting.
In what sense?
Well, if you have less appraisals out there, very often the company wants to get rid of them and settle them.
So , it is happening very often.
They will just go along and settle it.
A lot of good things can happen.
I cannot tell you how many times over the past we went and did these no-brainers.
People would laugh and say to me, how can you ever make money on them?
In 1968, i made 10 times my capital.
They said, well, the market is booming or something like that.
For you to make money on this, the market has to go down precipitously.
I said, what the hell, i have no risk.
Then, the market fell apart.
There are arcane areas where you can do the puts, the calls.
But i am saying that these do exist.
I cannot tell you why you will do this.
You have an infinite risk reward ratio.
A lot of times you make a lot more than you believe you would have.
This is the own option.
I do think he is getting a great bargain.
People do what is in their own self-interest.
Michael is a smart guy.
I don't think he has run the company very well over the last four years.
I think this would be a major bust.
That does not mean that he is not a smart guy.
If this ceo is all mice, he is catching a falling knife.
That is not what he does.
That is not what people do and you cannot blame them for that.
Look at him, he is going in and catching a falling knife.
He knows the company better than anyone.
He is paying for it.
In your words, if he badly wants to have it.
I don't think that anybody would accused him of doing this for charity.
If you are in charge today, who would you put in?
There are three or four guys that are really good for this.
Nobody is going to accept a job if they have another good job or even if they'd don't, walking into a beehive or a proxy fight.
After we changed the ceo, he went from 22 to 240. you take a look at that company, you take a look at philip services.
Motorola is a great example.
None of these guys would have taken the job if they were walking into a proxy fight.
I think that would be an added factor for this company to bring in the right ceo that could manage this company a lot better.
I think that michael dell, i not against him.
Very often the founder of the company should not be running it later when it matures and i don't think he has not done a good job and i think the board has been asleep on the switch.
They should have held him accountable years ago.
They have had a very poor performance.
Instead of saying that you are out of here, they are going to reward him.
One of the interesting things, when i read the merger agreement is that it did not have any provision that would allow for michael dell and silver to get out of the deal in the event that shareholders did exercise the appraisal rights.
Sometimes there are clouds in the deal.
If enough shareholders come through and say that we want that opportunity to exercise our appraisal rights, i imagine it would put a certain amount of pressure on silverlake, on michael dell, on anyone financing this to say, we don't want people doing that, we don't want this going for this course because this is a real gamble.
I see you did your homework.
I think that we understand that.
It is very unusual that you don't put in a provision that you can't opt out of a deal if you are the purchaser.
The banks don't like them.
Therefore, there is the motivation to sell the appraisal right thing.
But, maybe the board did one good thing in this whole deal because i think the board has not acted really for shareholders.
That is my opinion.
On this one, i think it was good that they were not allowed . they would face a $750 million penalty.
I think that dell will definitely close.
I think there is risk there.
There are material efforts to change risk, too many people go for appraisal rights.
I take umbrage of well, you have to worry about the cap.
What about the cap.
-- take umbrage of, well, you have to worry about the gap period for icahn.
What is your plan for running this company to get it back to where was two years ago?
It is like asking a running back, what was your plan when you saw three guys coming at you and the guys good and he gets around him.
He did not have a plan.
These things have a life of their own and if you want to talk about a plan here, i think that there is a great secular change going into the clouds.
The pc is not going away.
That is not going to be the screen, the mouse, the keyboard.
This is the forefront with some of the technology to take advantage of that.
They have service in the back office.
People did not like motorola solutions for a wild.
For a wild.
This is embedded in every fire station and police station and everyone was ignoring that.
We made a great deal of money with that.
The issue i will say applies to dell.
You found a ton of opportunities.
Your friend bill ackman feels he has found the opportunities telling investors that he is raising a billion dollars to buy the stock for the largest u.s. company.
Some people think it could be fedex.
What do you say?
I think is not urban -- i hope it is not herbalife.
I have said my piece on that.
Carl icahn , you're coming up with a new offer tomorrow.
You are sweetening your offer.
Can you give us any more hints?
We are going to come and add to the package which we think is superior already.
We think that it will be around $20, buy the stock at 20 and we will give the shareholders a piece of that warrant.
We think that will make it utterly superior and we will go to the independent board.
We will show them this and tell them that we think it is superior.
This is our recommendation and we hope that it has traction.
You cannot be sure, obviously.
So, we will see what happens.
So, you heard it here first.
You heard it here on bloomberg tv first.
Thank you so much, carl icahn.
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