Dell, Icahn Strike a Deal

Dell HQ
Dell HQ

You can't always get what you want, but if you try, you might get what you need. That seems to be the outcome of the deal announced today between Dell Inc. (NASDAQ: DELL) and activist investor Carl Icahn, who had contemplated making a counteroffer for the computer maker.

Under today's deal, Icahn has agreed to limit his stake in Dell to 10% of the firm's shares in exchange for the right to contact other shareholders whose stakes do not exceed 15% of Dell about making a possible bid for the company. Icahn had suggested that he may bid $15 a share for a controlling stake in Dell, well above the offer from founder Michael Dell and Silver Lake Partners to take the company private for $13.65 a share.

A third offer of more than $14.25 a share for a controlling interest is being led by Blackstone Group L.P. (NYSE: BX).

What both Dell and Icahn get from today's deal is a stabilization of Dell's share price, which should keep the stock from falling back to its level of less than $11 a share shortly before the offer from Dell and Silver Lake. If Icahn cannot put together a deal, then the original bid still looks good to shareholders and yields a bargain price to the buyers. If Icahn can put together a better offer, Dell shareholders get a bonus.

Either way, shareholder lawsuits could evaporate because the company has said it is open to an offer better than the one it already has on the table.

Shares of Dell are up about 0.4% today at $14.10 in a 52-week range of $8.69 to $16.61.

Filed under: 24/7 Wall St. Wire, Activist Investor, Mergers & Acquisitions, Mergers and Buy Outs, PC Companies, Private Equity, Shareholder Issues Tagged: BX, DELL, featured