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Icahn turns to the law to upset Dell bid

Simon Quicke

With just a week to go before Dell shareholders vote on the buyout proposals one of those bidding for control of the firm has decided to turn to the law in an effort to make it harder for the issue to be resolved next Thursday.

Carl Icahn, who is Michael Dell's main rival for Dell, has urged shareholders to take advantage of a provision in Delaware law to provide them with a 60 day period post vote to change their minds if they don't like the $24.4bn or $13.65 per share offer from Michael Dell and Silver Lake.

Because it is in Delware Dell would be subject to a law that states if a firm is acquired and is then incorporated into a holding company of the new owners then it counts as a merger and shareholders have the right to ask a court to determine the value of their shares.

The shareholders would be given 60 days to take up that option and the threat of it adds further pressure to the vote, which had looked like it was heading in Michael Dell's direction earlier this week after he received the backing of some major investors.

"Under Delaware law if a merger occurs and you did not vote for it, you are entitled, through appraisal, to the fair value of your shares as determined by a Delaware court. We have done a great deal of due diligence concerning the value of Dell, and as we have said in the past, we believe the $13.65 merger price substantially undervalues your Dell shares, and we believe if you seek appraisal, you will receive more," stated Icahn in a letter to shareholders.

"But what is most important about seeking appraisal is that you can change you mind about appraisal up to 60 days after the merger and still take the $13.65 per share.  During the “free 60 day period” we believe Dell may wish to negotiate with those that sought appraisal and possibly pay a premium over $13.65 to get them to settle and drop their appraisal claims," he added.


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