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Icahn fighting Dell buyout

Billionaire, large shareholder put together rival bid

One of the biggest critics of Michael Dell’s plan to take the company he founded private has launched a fresh challenge to that $24.4 billion bid and says the slumping PC maker needs new leadership.

Billionaire investor Carl Icahn has teamed with Dell’s largest independent shareholder, Southeastern Asset Management, to pitch a deal that would let Dell shareholders keep their stake in the company and give them either $12 a share in cash or additional shares.

Icahn and Southeastern say this alternative, which would keep the company publicly traded, gives shareholders a stake in future company gains, according to a May 9 letter sent to Dell’s board.

An investment group led by Michael Dell offered earlier this year to pay $13.65 a share in a deal that would take the Round Rock, Texas, company private. But Icahn said Friday during a CNBC interview that price amounted to a giveaway.

“It’s really a travesty,” he said. “It’s almost like something out of ‘Saturday Night Live.’ ”

Icahn and Southeastern heaped more criticism on Dell’s offer in the letter. They accused the Dell board of insulting shareholder intelligence by claiming to be focused on shareholders’ best interests while accepting Dell’s offer to buy the company for “far below what we consider its value to be.”

“You not only sanctioned Michael Dell’s offer, which amazingly allows him to purchase the company from shareholders with their own money but, to add insult to injury, you have agreed to give Mr. Dell a breakup fee of up to $450 million,” the letter states.

A special committee of Dell Inc.’s board said in a separately that it is carefully reviewing the proposal from Icahn and Southeastern “to assess the potential risks and rewards to the public shareholders.”

Icahn and Southeastern say they would pay for their offer with existing cash from the company and about $5.2 billion in debt, which would be less than Michael Dell’s plan requires. Company documents outlining Dell’s buyout proposal state that it would involve a $2 billion loan from Microsoft Corp. and up to $13.75 billion in other debt from lenders.

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