Icahn Opens New Front In Dell Fight

Jul 11 2013 | 12:15pm ET

Spurned by the major proxy advisory services in his battle against the sale of Dell Inc., Carl Icahn is changing tack again.

The billionaire, who owns an 8.7% stake in Dell, told fellow investors that he planned to exercise appraisal rights on his shares as allowed under Delaware law. He urged them to follow suit, writing that if enough do so, company founder Michael Dell and private-equity firm Silver Lake Partners may be forced to raise their $24.4 billion offer for the company.

The move is a big risk: The Delaware court could find that Dell shares are worth less than the $13.65 offered by Michael Dell and Silver Lake, but Icahn expressed confidence.

"We believe the $13.64 merger price substantially undervalues your Dell shares, and we believe if you seek appraisal, you will receive more," Icahn said. He said if a sufficient mass of investors vote against the deal and seek appraisal, it would put "significant pressure" on Michael Dell and Silver Lake during the 60-day period in which dissenters can change their vote. The deadline for voting is a week from today.

The appraisal move follows a series of other attempts by Icahn to undermine the deal. An earlier effort to take control of the company via a leveraged recapitalization was abandoned in favor of a $14 billion share buyback plan. Last month, a Delaware Chancery Court judge rejected Icahn's bid to block the buyout, ruling that there is no "plausible, conceivable basis in which to conclude that it is a colorable possibility that you could deem the choices made by this board to be unreasonable with all the different safeguards."

Icahn this week canceled a meeting with the special committee of Dell's board that is overseeing the sale.

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