Dell Committee Says the Icahn Plan Won’t Work

The Dell committee tasked with evaluating competing offers for the company has put together a presentation that supports founder Michael Dell’s privatization plan over investor Carl Icahn’s recapitalization plan. It says the Icahn plan is $3.9 billion short of the necessary cash and that it doesn’t solve the problems facing the PC maker.

Michael J. De La Merced with The New York Times reported, “As Dell prepares to defend its $24.4 billion sale to its founder, the computer company took a big swipe at two of its biggest investors, who oppose the leveraged buyout. In a presentation filed with regulators on Wednesday, Dell argued that an alternative plan by Southeastern Asset Management and the billionaire Carl C. Icahn would leave shareholders stuck in a still-public Dell whose coffers and performance continue to decline.”

Reuters added, “A Dell Inc special committee challenged Carl Icahn on Wednesday, saying the activist investor is almost $4 billion short of the cash needed to fund his proposal for a $12-per-share special dividend.”

ZDNet’s Larry Dignan explained, “The special committee has two deals on the table. An all cash deal from Michael Dell and Silver Lake Partners for $13.65 a share and an alternative plan by investor Carl Icahn that leverages the company to pay a $12 special dividend. Blackstone was in the running but was spooked by the PC market meltdown.”

All Thing’s D’s Arik Hesseldahl added, “The committee reiterated its support of the $24.4 billion proposal from CEO Michael Dell and the private equity firm Silver Lake Partners, calling it the best option available to the company. It says in the deck that the $13.65-per-share buyout price amounts to a premium of 5.4 times Dell’s estimated EBITDA for the 2014 fiscal year, and ‘significantly exceeds’ Dell’s multiples during the prior year.”