--Dell warns market trends endanger transformation
--Company says Icahn counterproposal based on "unrealistic
multiples"
--Mr. Icahn accuses Dell of using "scare tactics" to push Silver
Lake Deal
(Adds comments by Carl Icahn, updates throughout.)
By Drew FitzGerald
Activist investor Carl Icahn late Friday accused a Dell Inc.
(DELL) special committee recommending that investors accept founder
and Chief Executive Michael Dell's $24.4 billion go-private deal of
using "scare tactics" to push the transaction.
"To us it seems that no one has less confidence in Dell than
Dell itself," said Mr. Icahn in a letter to other investors Friday.
He added, "I can't help ask myself why, if Dell is so awful, do
Michael Dell and Silver Lake, both very astute investors, want to
buy it."
Mr. Icahn was responding to the company's comments earlier
Friday, in which it said that the performance of rival
Hewlett-Packard Co. (HPQ) "has been superior to Dell's" and
reiterated that trends hurting the PC business could endanger
Dell's planned transformation into a more profitable
information-technology provider, which it hopes to do by boosting
its portfolio of software and services.
A buyout offer led by Mr. Dell and private-equity firm Silver
Lake Partners would take those business risks off current
shareholders' shoulders, the company said.
Dell made its arguments in a slideshow prepared for investors
and filed with the Securities and Exchange Commission. The filing
comes a week before Institutional Shareholder Services, a firm that
advises investors on how to vote on company proxies, is expected to
release its analysis of the go-private offer. That review could
influence the outcome of shareholders' vote on the proposal
scheduled for July 18.
According to The Wall Street Journal, ISS's questions to Dell
management suggested that the firm was at least sympathetic to the
concerns raised by dissident shareholders Southeastern Asset
Management Inc. and Mr. Icahn.
After a torrent of public filings promoting Mr. Dell's offer,
the company's special committee "will probably be a little more
quiet with the shareholder vote coming up in a couple of weeks,"
ISI Group analyst Brian Marshall said. "If they can convince
Michael to raise his bid a little bit, ultimately would look a
little bit sweeter in the eyes of shareholders."
Media reports have said Dell's board has quietly asked Mr. Dell
to raise the per-share offer price from $13.65 by using more of his
own wealth, a move that could head off the counteroffer from Mr.
Icahn and Southeastern Asset Management that plans to keep a slice
of the company publicly traded.
The Wall Street Journal, citing a person familiar with the
matter, reported Friday that Mr. Dell doesn't plan to boost his bid
for the computer maker, a message that sent Dell shares sinking
Friday as investors feared his proposed deal wouldn't get done.
Mr. Icahn has said he has raised more than $5 billion to finance
his plan to recapitalize the ailing PC maker, a move he said should
end speculation that the funds wouldn't be available. On Friday,
Mr. Icahn stood by his $14-a-share offer, and said he would
continue to hold Dell shares.
The company wasn't immediately available to respond to Mr.
Icahn's letter. But Dell earlier Friday said Mr. Icahn's proposal
valued the company at "unrealistic multiples" worth more than twice
the current valuation of H-P. The company also said PC exposure
will likely continue to weigh on its share price, creating
"substantial downside risk" to shareholders if the deal is
rejected.
Dell shares closed 2.1% lower on Friday at $13.03, and were up a
penny after hours.
--Melodie Warner, Sharon Terlep, David Benoit, Shira Ovide and
Kristin Jones contributed to this article.
Write to Drew FitzGerald at andrew.fitzgerald@dowjones.com
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