The special committee of the board of Dell issued a letter to stockholders. "We are writing to update you regarding our evaluation of the various leveraged recapitalization transactions that Carl Icahn has proposed, including the most recent version put forth at the end of last week, and to make some observations about leveraged recapitalizations more broadly. The basic concept that Icahn has proposed would be a $15.6B self-tender by the company at a price for each share actually purchased of $14. Icahn and Southeastern Asset Management would agree not to tender any of their shares. On Friday, Icahn proposed that the tender price would also include, for each four shares purchased, one warrant to purchase an additional share at a $20 strike price. If these transactions were consummated and all stockholders other than Icahn and Southeastern tendered, each stockholder would be required to retain approximately 29% of his or her shares in the highly leveraged public company that would result, and would receive for each share held approximately $9.99 in cash and 0.18 warrants...At various points, Icahn has asked the Special Committee to declare the transaction he has outlined a “Superior Proposal” under Dell’s existing merger agreement or to withdraw our recommendation in favor of the Michael Dell/Silver Lake merger. In fact, however, he has not constructed his proposal in a manner that makes that possible or appropriate...More broadly, based on analyses prepared by our advisors and our own view of the business, we do not believe that Icahn’s proposal is superior to the certainty of value offered by a sale of the entire company at $13.65 per share. The addition of warrants to Icahn’s concept has not meaningfully altered the value equation: The warrants themselves would, according to the analyses we have reviewed, be of modest value and that value would be offset in part by their dilutive effect on the stub equity held by the recipient. Further, on receipt, the entire value of the warrants would likely be taxable to the holder...We have studied the options very carefully and our conclusion, which has been supported by all of the leading proxy advisory services, is that a sale transaction at a substantial and certain premium is the best way forward. That is why we urge you to vote the WHITE card promptly by telephone or internet in support of receiving $13.65 per share in cash."
- Investment & Company Information
- Carl Icahn