By Nathalie Tadena
Dell Inc.'s (DELL) special committee dismissed activist investor
Carl Icahn's push for shareholders to seek an appraisal of their
shares Thursday, saying the move would involve substantial risks
and costs.
The billionaire investor Wednesday urged shareholders to head to
court to force Michael Dell to pay more, Mr. Icahn's latest effort
to ruffle a $24.4 billion buyout slated for a shareholder vote next
week. Mr. Icahn has taken up the mantle of getting a Delaware judge
to appraise the value of the computer company, a ruling that could
lead to those who join him getting more or less than the
$13.65-a-share buyout.
In a letter to shareholders earlier Thursday, Mr. Icahn called
his plan to get an appraisal was a "no-brainer" involving "no
risk."
In response, Dell said Mr. Icahn's statements about the pursuit
of an appraisal are misleading.
"Mr. Icahn is asking Dell stockholders to vote against the
certainty of $13.65 per share in cash to pursue a highly
speculative appraisal remedy," the special committee said. "He is
also asking them, if the merger does not occur, to cede full
control of Dell's board to nominees of the Icahn group and then to
hope for a highly leveraged recapitalization transaction that he
himself admits may never come to fruition."
The decision to seek an appraisal suggests Mr. Icahn is
resigning himself to the possibility shareholders vote for the
buyout next week, as his plan would only impact shareholders if the
deal passes. At the same time, because a shareholder has to vote
against the deal to seek an appraisal, if enough shareholders
attempt the maneuver it could block the deal.
Dell said that if a sufficiently large number of shareholders
seek appraisal and don't vote in favor of the buyout, then the
merger will be terminated and shareholders will continue to bear
the risks of holding Dell shares. The company also said there is no
assurance a court would determine the fair value of Dell shares to
be greater than the offer price from Mr. Dell and private-equity
firm Silver Lake Partners and it could determine the value to be
less.
Dell said that Mr. Icahn's claim that the buyers may settle
appraisal proceedings for an amount in excess of $13.65 within 60
days after the merger is "baseless" and "directly contradicted" by
the buyers' stated intention as set forth in the company's proxy
statement.
In Delaware, a shareholder is allowed to seek a judge's opinion
on what the long-term intrinsic value of a company is, instead of
outright accepting a merger offer. If a judge were to determine
that Dell shares are worth more than $13.65, the buyout group would
be forced to deliver the extra amount, with interest, to those
shareholders who sought the appraisal.
Mr. Icahn, Dell's second-largest shareholder behind Mr. Dell,
has repeatedly criticized the bid by Mr. Dell and Silver Lake
Partners to take the company private for $24.4 billion, saying the
proposal undervalued Dell's shares with its $13.65-a-share price
tag.
Dell shares were up by seven cents to $13.42 after hours
Thursday.
-Write to Nathalie Tadena at nathalie.tadena@dowjones.com
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