Dell Finalizes Icahn's Stake - Analyst Blog
19 April 2013 - 3:40PM
Zacks
The board of Dell Inc. (DELL) has fixed the
ownership stake of Carl Icahn and his associate entities to not
more than 10.0% of the company's shares.
This deal also covers shareholders other than Ichan, who would
jointly hold more than 15.0% of Dell’s outstanding shares.
Some of Dell’s shareholders have expressed their dissatisfaction
with Michael Dell’s offer, after which Ichan and investment firm
Blackstone (BX) have raised the bid.
Icahn already has a leading position among minority shareholders
and could therefore make it difficult for Michael Dell to acquire
the controlling stake.
Moreover, this has been a major hurdle for Dell's board, who
were more inclined toward Michael Dell and an investment group led
by Silver Lake Partners to take the controlling stake.
Icahn has announced that he has rejected Dell's offer of $25.0
million as expense reimbursements if he agreed not to attempt a
hostile takeover.
The latest decision regarding the stake came quickly, as Icahn
Enterprises received an approval to terminate the normal waiting
period -- i.e. within a period of 6 days -- which is generally
needed before somebody can acquire a 25% ownership stake.
Considering the latest developments, Dell’s future remains
uncertain. In the past year, the company has had its share of
challenges, as cutthroat competition from
Hewlett-Packard (HPQ) and Apple
Inc. (AAPL), as well as a restricted spending environment
hurt revenues.
Moreover, privatization might help Dell move away from public
scrutiny, but the decision regarding ownership is taking some time
to settle.
Dell Inc. has a Zacks Rank #5 (Strong Sell). Therefore, we would
instead recommend Symantec Corp. (SYMC), which has
a Zacks Rank #2 (Buy). Synopsys Inc. (SNPS), which
carries a Zacks Rank #1 (Strong Buy) also looks attractive.
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