Dell, Activist Investor Icahn Agree on Share-Ownership Cap

Activist investor Carl Icahn has reached a preliminary agreement with Dell Inc. to help him discuss alternatives to the existing Dell buyout bid with other company investors.

“My affiliates and I expect to engage in meaningful discussions with other Dell shareholders, discussions that we believe will help to facilitate alternatives to the existing (buyout) transaction with Michael Dell,” Icahn said in a written statement Tuesday.

But Icahn also said that in taking the agreement, he did not give up his rights to wage a proxy fight against the $24.4 billion buyout offer that Michael Dell and his partner Silver Lake Partners of California have made for the Round Rock, Texas-based computer maker.

The special committee to Dell’s board disclosed recently that it had offered to reimburse Icahn up to $25 million of his expenses in researching the Dell buyout if he would agree not to wage a proxy fight. The special committee already has agreed to make such reimbursement payments to Blackstone Group, another potential Dell buyout bidder, and Michael Dell and Silver Lake.

Both Icahn and Blackstone surfaced as potential bidders for the company in the “go-shop” period after Dell’s board agreed to the buyout offer Feb. 5. Neither has made formal bids for the company. Icahn has suggested he might offer $15 a share for 58 percent of Dell’s stock. Blackstone has said it could offer $14.25 a share, but not for the entire outstanding stock. The Dell/Silver Lake offer is for $13.65 a share.

Icahn said Tuesday that he will hold onto his rights to fight the Silver Lake offer.

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

“Dell shareholders are entitled to a free exchange of ideas as they make this important decision, and that includes the right of shareholders to evaluate all alternatives. We look forward to speaking with Dell shareholders in the days and weeks ahead.”

Icahn and his affiliates disclosed that, as of Monday, they own 80.5 million shares of Dell stock, which is a 4.6 percent share of the company.

As part of the latest agreement, Icahn agreed not to buy more than 10 percent of the company’s stock while he considers whether to make a formal offer for the company.

Icahn also agreed that he would not enter into an agreement with other shareholders that collectively would own more than 15 percent of Dell’s shares.

In exchange for that agreement, Dell granted Icahn a limited waiver under corporate law to make it easier for him to talk with other shareholders.

Dell’s special committee said in a statement that its new accord with Icahn “will maximize the changes of eliciting a superior proposal from Mr. Icahn while, at the same time, protecting the shareholders against potential accumulation of an unduly influential voting interest.”