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Icahn Associates offers $14 a share to buy 62 per cent of Dell

Urges shareholders to reject $13.65 per share offer of Michael Dell and Silver Lake Partners.

Investor Carl Icahn, through his firm Icahn Associates, has proposed to pay $14 a share to buy 62 per cent of stake in Dell if shareholders rejected an offer of $13.65 per share (totalling $24.4bn) placed by Michael Dell and private equity firm Silver Lake Partners.

Dell shareholders are expected to vote on Michael Dell’s offer on 18 July 2013.

Icahn intends to finance the offer of $16bn for 1.1 billion shares, through $5.2bn new debt, $7.5bn in cash from Dell and $2.9bn through the sale of Dell receivables.

Meanwhile, Southeastern Asset Management has sold over 72 million shares, which is half of its stake in Dell, to Icahn at a price of $13.52 a share. Icahn now holds 4.1 per cent in the personal computer manufacturing giant.

Icahn and Southeastern jointly own 13 per cent of Dell.

Southeastern Asset Management, in a release, said that it continues to believe that the Michael Dell / Silver Lake management buyout proposal undervalues the company and its prospects going forward.

“Southeastern and Icahn Associates have been working diligently to provide a better alternative for shareholders. Southeastern has determined that Icahn is in the best position to lead the development of an alternative transaction and to generate a better outcome for shareholders,” it said.

The company said that it will vote, at Dell’s Annual Meeting, for a new group of directors.

A statement issued by Special Committee of the Board of Dell said that they are reviewing the latest concept put forth by Carl Icahn, but called it a further deviation from Icahn’s original proposal of a buyout at $15 per share. It observed that Ichan’s concept would likely force shareholders to continue to own shares in the highly leveraged company that would result.

“Mr. Icahn’s concept is not, in its present state, a transaction that the Special Committee could endorse and execute – there is neither financing, nor any commitment from any party to participate, nor any remedy for the company and its shareholders if the transaction is not consummated. In addition, the concept does not adequately address the liquidity issues and other risks the Committee previously highlighted,” the statement added.