Icahn raises bid in last-ditch effort to thwart Michael Dell

Billionaire activist investor Carl Icahn yesterday raised his bid for personal computer maker Dell Inc, to about $15.50 to $18 per share, his latest gamble for the takeover battle with company founder Michael Dell, whose $24.4 billion buyout offer is slated for a shareholder vote next week.

The move from Icahn comes a few days after he urged Dell shareholders to seek an appraisal of their shares from a court in Delaware to assess whether Michael Dell and private equity firm Silver Lake Partner's $13.65 per share offer represents a fair price. (See: Carl Icahn urges Dell shareholders to get shares appraised in Delaware Court)

In his last-ditch effort to thwart Michael Dell from walking away with company he founded in 1984, Icahn is offering shareholders a chance to own a bigger stake in Dell by sticking to his earlier call for it to buy back 1.1 billion shares at $14 per share. Now he has added a warrant for every four shares tendered.

The warrant would give shareholders the right to buy one Dell share for $20 over the next seven years, valuing Icahn's revised offer at about $15.50 to $18 per share.

Dell's special committee said it is reviewing Icahn's revised offer and is willing to talk to the investor.

"We believe it is critical that Dell shareholders not be distracted from the clear choice they must make next week - take $13.65 per share in cash or bear the risks of continuing to hold their Dell shares," the special committee said.

Icahn, along with Southeastern Asset Management, who together hold nearly 13 per cent in Dell, have been opposing the $13.65 per share offer from Michael Dell, arguing that he is attempting to buy the world's third-largest PC maker at a steep discount.

Icahn's call for appraisal has come a few days after three proxy advisory firms - Institutional  Shareholder Services, Glass Lewis and Egan Jones - backed Michael Dell's offer and recommended to shareholders they accept the deal rather than risk further exposure to a deteriorating PC market (See: Proxy advisory firm ISS backs Michael Dell's $24.4-bn bid).

With the introduction of inexpensive tablets and low-end machines used primarily for consumption in mature and developed markets, the global PC and mini-notebook market has shrunk, denting the bottom line of PC manufacturers.

In its second quarter PC shipments report released on Wednesday, technology research firm Gartner said that global sales of PC's have fallen for the fifth quarter in a row, making it the "longest duration of decline" in history (See: PC sales fall for the fifth consecutive quarter: Gartner).

Gartner said that Dell's shipments for the quarter declined compared to a year ago, but its 2Q13 results showed a smaller decline than the past several quarters.  Although Dell showed good growth in the US and Japan, it struggled to increase shipments in Asia / Pacific and the EMEA.

Michael Dell, who holds nearly 16 per cent in Dell Computers, has often said that he would like to restructure the company away from the critical eye of Wall Street by cutting costs and jobs, diversifying into the more profitable data storage and enterprise software business.

Responding to Icahn's revised offer, ISS said it will not alter its recommendation to Dell shareholders to vote for the Michael Dell-Silver Lak buyout, and still believes that Icahn's new offer carries the same risks as before.

Icahn and Southeastern Asset Management would stand to lose in hundreds of millions if shareholders vote on 18 July in favour of Michael Dell's offer.