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Icahn agrees to limit Dell stake, can team up on bid

A man wipes the logo of the Dell IT firm at the CeBIT exhibition centre in Hannover February 28, 2010. REUTERS/Thomas Peter
A man wipes the logo of the Dell IT firm at the CeBIT exhibition centre in Hannover February 28, 2010. REUTERS/Thomas Peter

(Reuters) - Billionaire investor Carl Icahn has agreed to limit his investment in Dell Inc and in return can team up with other shareholders on a potential bid for the personal computer maker, Dell said on Tuesday.

An agreement with activist investor Icahn prevents him from buying shares that would bring his Dell ownership to more than 10 percent or signing deals with other shareholders that would bring their collective ownership to more than 15 percent, Dell said.

Icahn, who owns a $1 billion stake in Dell, is part of a group of shareholders opposed to a proposal by founder Michael Dell and private equity firm Silver Lake to take the company private.

Icahn said in a brief statement that his latest agreement with Dell does not prevent him from embarking on a proxy fight.

"I want to make it very clear that I have retained the absolute right to conduct a proxy fight at Dell," Icahn said. "In fact, I have refused to take a $25 million expense reimbursement from Dell as the price of giving up a proxy fight."

A Dell special board committee, which is handling all buyout-related matters, had offered to reimburse Icahn for up to $25 million in expenses related to his alternative proposal for Dell if he agreed to not mount a proxy fight.

Icahn and private equity company Blackstone have each offered alternative that would keep part of the company public. They have had preliminary talks about working together.

Both Blackstone and Silver Lake are being reimbursed for their expenses after agreeing to the restrictions.

Southeastern Asset Management, the activist investor that owns 8.4 percent of Dell, said earlier this month the computer maker's evaluation of a $24.4 billion leveraged buyout deal with its founder and buyout firm Silver Lake was flawed.

Southeastern published a letter it sent to Dell's board of directors asserting the company's March 29 proxy statement failed to make a compelling case for shareholders to accept the $13.65 per share offer from Michael Dell and Silver Lake. The letter says Dell's special committee did not properly explore all options.

Dell was regarded as a model of innovation as recently as the early 2000s but has struggled to make up for declining market share of the global PC market.

Dell shares rose 0.1 percent to $14.06 in Tuesday afternoon trade.

(Reporting by Nicola Leske; Editing by Gerald E. McCormick and Jeffrey Benkoe)

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