Dell Inc.’s special committee offered a new round of criticism for the latest proposal for the company offered by billionaire activist investor Carl Icahn.
In a filing with regulators Monday, the special committee said that the “concepts” being offered by Icahn and his ally, Southeastern Asset Management Inc., a major Dell investor, “lack credibility.”
The committee said each of the three proposals offered by Icahn since March have deep flaws and Icahn has “failed to provide any of the key provisions and mechanics… as requested” to address those shortcomings.
The special committee already has endorsed the $24.4 billion buyout offer made for the company by founder and CEO Michael Dell and California-based Silver Lake Partners. That proposal, valued at $13.65 a share, is due to be voted on buy Dell shareholders at a special meeting July 18.
Icahn is urging Dell Inc. shareholders to vote down that plan and consider his proposal for the company afterward.
Later Monday, Southeastern Asset replied to the committee’s criticism with its own filing that reiterated its position that the Dell/Silver Lake offer undervalues the company “while superior alternatives exist.” The filing said that Dell shareholders have spent over $10 billion in recent years on new acquisitions to help transform the company. “Stockholders have funded the company’s turnaround and should be given the opportunity to benefit from their investment,” Southeastern said.
In its filing, the Dell Inc. committee said it has never received enough detailed information from Icahn to consider any of them to be “actionable and potentially superior” to the plan it already has endorsed. But it also said it stands ready to negotiate such a proposal if and when Icahn provides it with adequate information.
“Despite extensive due diligence over many months, Icahn has not secured committed financing for any of these schemes,” the filing said. The committee goes on to say that Icahn’s latest “concept,” presented last week, has a $2.9 billion potential funding shortfall.
The “Icahn concept would only fund the equivalent of an $8 per share cash distribution, even if fully financed,” the statement said.
The Icahn proposals, the committee said, elevate Dell Inc.’s potential business risks and could affect the loyalty of the company’s employees, customers and vendors. They also leave it in “weaker financial position to complete (the business) transformation” that Dell already has said it needs to make.
Dell Inc., which is facing increasing competition from low-cost competitors for personal computer sales, has said it needs to shift more of its business to providing advanced hardware, software and services to enterprise customers.
The company employs more than 100,000 people worldwide and about 14,000 in Central Texas, where it is the largest private employer.