Michael Dell is facing new opposition to his plan to take his eponymously named company private after "activist investor" Carl Icahn demanded a $15.7bn (£10.4bn) special dividend.
The billionaire investor wants to force Dell to pay $9-per-share (£5.99) in a special dividend immediately from a combination of its own cash reserves and from $5.25bn (£3.5bn) in new debt. In a letter to the Dell board, he claimed that the proposed $24.4bn (£16.2bn) buyout undervalued the company and short-changed shareholders. The only people to benefit from the proposed deal, he said, was Michael Dell.
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"We see no reason that the future value of Dell should not accrue to ALL the existing Dell shareholders - not just Michael Dell," wrote Icahn in the letter, disclosed in a regulatory filing to the Securities and Exchange Commission (SEC).
However, Icahn's demand would add some 67 per cent to the de facto cost of the proposed privatisation. And the billionaire investor threatened years of legal action against the company should Dell seek to forge ahead with a vote on the deal without also considering a special shareholder vote at the same time.
"If you fail to agree promptly to combine the vote... we anticipate years of litigation will follow challenging the transaction and the actions of the directors that participated in it," threatened Icahn in the letter.
Helpfully, Icahn also pledged to provide a $3.25bn (£2.16bn) bridging loan to Dell to help speed up his proposed transaction.
Icahn is one of a number of big investors lining up in opposition to the deal to take Dell private, which is being led by Michael Dell and his private equity partner Silver Lake.
Other big Dell shareholders to oppose the deal include Southeastern Asset Management, which has a stake of more than eight per cent, alongside Icahn's stake of about six per cent, according to an estimate from business television channel CNBC.
While shareholders are jostling for a better deal from Dell, the growing opposition could also flush out alternative potential bidders, including proposals to break the company up.
