Ahead of the Bell: Dell Inc.
NEW YORK (AP) — Shares of Dell Inc. edged up in premarket trading Monday, a day after Carl Icahn reiterated the benefits of his alternate proposal for the computer maker, which is backing a bid by founder Michael Dell to take the company private.
Icahn, a billionaire investor and Dell's second-biggest shareholder, said Sunday that he believes that there are "many opportunities to enhance the value of Dell through cost savings."
Icahn wants Dell to remain publicly traded and repeated that the company should buy back $16 billion in stock to give shareholders a bigger return on their investment.
Shares of the Round Rock, Texas computer maker slipped about 2 percent on Friday after reports suggested that Michael Dell and Silver Lake Partners don't plan to raise their buyout offer worth $13.65 per share, or $24.4 billion, for the company. Michael Dell believes he can turn the company around by taking it private and diversifying into niches, such as business software, data storage and consulting. The company has backed Michael Dell's proposal.
Shareholders will vote on the buyout offer at the company's annual meeting on July 18.
A special committee from Dell's board has said Icahn does not have adequate financing for his proposal. Icahn is proposing that Dell repurchase up to 1.1 billion Dell shares at $14 apiece, a plan that would be funded with $5.2 billion in debt, $7.5 billion in Dell cash and $2.9 billion from the sale of Dell receivables. Icahn has said he and his affiliates have $5 billion in existing equity and proposed debt financing to help fund their proposal.
"I have not risked $5 billion merely to get a bump from Michael Dell and Silver Lake. I have risked it to have a large investment in a company with great potential," Icahn said in a statement Sunday. He added that he believes Michael Dell is trying to buy the company he founded at a "bargain price."
In a form filed with the Securities and Exchange Commission on Friday, the company said his valuation of the company is not realistic and that shares would tumble if the sale is rejected.
Dell shares rose 17 cents, or 1.3 percent, to $13.20 in premarket dealings on Monday. The stock has traded between $8.69 and $14.64 over the past year.