Dell (DELL) Special Committee Notes Risk in Icahn Proposal
The Special Committee of the Board of Dell Inc. (Nasdaq: DELL) issued the following statement in response to a letter to shareholders released today by Carl Icahn:
“We are today reviewing the fifth proposal from Carl Icahn, which would include issuance of warrants in connection with the self-tender proposal he previously outlined. We are working with our advisors to evaluate whatever benefits might flow to shareholders from the warrant he has proposed to include in his structure. We would note that a portion of any value attributed to the warrants would be offset by a reduction in the value of the recipients’ stub equity, as well as the fact that receipt of the warrant would likely be a taxable event. We have been and remain willing to meet or talk with Mr. Icahn about his various proposals, including at a meeting scheduled earlier this week which he requested and subsequently cancelled.
“More broadly, it is important to note that all of Mr. Icahn’s various proposals require abandoning an all cash transaction at a substantial premium with a high degree of closing certainty that shifts all of the risks of the business to the buying group in exchange for a highly speculative recapitalization concept that relies upon the future value of a leveraged public technology company. We have studied variations on this theme for months and continue to have substantial reservations about that value proposition.
“Most important, we believe it is critical that Dell shareholders not be distracted from the clear choice they must make next week – take $13.65 per share in cash or bear the risks of continuing to hold their Dell shares.”
The Special Committee continues to recommend that shareholders vote FOR the $13.65 all cash merger promptly by telephone or internet, following instructions on the WHITE proxy card, to be sure their votes are received in time to be counted at Dell’s Special Meeting to be held on Thursday, July 18, 2013 at 8:00 a.m. CDT.
“We are today reviewing the fifth proposal from Carl Icahn, which would include issuance of warrants in connection with the self-tender proposal he previously outlined. We are working with our advisors to evaluate whatever benefits might flow to shareholders from the warrant he has proposed to include in his structure. We would note that a portion of any value attributed to the warrants would be offset by a reduction in the value of the recipients’ stub equity, as well as the fact that receipt of the warrant would likely be a taxable event. We have been and remain willing to meet or talk with Mr. Icahn about his various proposals, including at a meeting scheduled earlier this week which he requested and subsequently cancelled.
“More broadly, it is important to note that all of Mr. Icahn’s various proposals require abandoning an all cash transaction at a substantial premium with a high degree of closing certainty that shifts all of the risks of the business to the buying group in exchange for a highly speculative recapitalization concept that relies upon the future value of a leveraged public technology company. We have studied variations on this theme for months and continue to have substantial reservations about that value proposition.
“Most important, we believe it is critical that Dell shareholders not be distracted from the clear choice they must make next week – take $13.65 per share in cash or bear the risks of continuing to hold their Dell shares.”
The Special Committee continues to recommend that shareholders vote FOR the $13.65 all cash merger promptly by telephone or internet, following instructions on the WHITE proxy card, to be sure their votes are received in time to be counted at Dell’s Special Meeting to be held on Thursday, July 18, 2013 at 8:00 a.m. CDT.