There has been a development in the battle over
) between Michael Dell and Carl Icahn. The Dell Special Committee
has received a fresh proposal from the billionaire investor,
wherein he suggested that Dell shareholders sell all their shares
to Dell for a sum totalling $16 billion.
This is a fresh move made by Icahn. In a month's time, Dell
shareholders will vote for or against the $24.4 billion ($13.65 a
share) bid made by Michael Dell and private equity firm Silver
Lake; Icahn needs to act before that.
Icahn is campaigning against the offer made by Michael Dell,
saying that the shares were being undervalued. Some newly
appointed directors would bring about a more favorable
outcome for shareholders. The new board would approve of Dell
buying back shares at the rate of $14 a share, higher than the
current bidding price of $13.65 offered by Dell and Silver
Previously, in March, after Dell announced its intention to go
private, Icahn offered a counter bid. While Icahn offered to pay
the investors $12 a share in cash or stock, he also allowed the
shareholders to hold to their share of the company. After
evaluating the deal, Dell's board came to the conclusion that
Icahn's offer would result in a $3.9 billion funding gap,
reducing the dividend figure to $10 a share from $12 per share,
which in turn would give rise to liquidity issues for the
Dell's attempt to go private is seeing a number of challenges
with Michael Dell - Carl Icahn conflicts, resulting in
significant delays and uncertainties. However, the possibility of
a higher return to shareholders has kept prices buoyant.
Dell has been hard-hit by the slowdown in the PC market.
Moreover, the company is up against cutthroat competition, low
business growth in Europe and a restricted spending environment.
The competition faced by the company in the Small & Medium
Business (SMB) and server segments is also a concern. This is the
main reason that founder Michael Dell sought to reinvent the
Dell carries a Zacks Rank #5 (Strong Sell).
Investors can consider other stocks in the technology space
), both of which carry a Zacks Rank #1 (Strong Buy) and
), carrying a Zacks Rank #2 (Buy).
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