M&A

It’s useful to be reminded every now and then that shareholders don’t really “own” corporations and they certainly don’t run them. Whatever you think of Carl Icahn’s self-funded, mildly loony plan to do a leveraged-recap-via-tender-offer of Dell, his basic argument, that Dell shareholders should be able to vote to (1) do that, (2) sell the company to its founder, or (3) none of the above, in some straightforward up-or-down way, had a certain real appeal. I mean, it’s their company, let them decide to sell 100% of it for $13.88ish or 80% of it for $14ish or 0% of it for … I see $13.82ish1 … or some intermediate pair of numbers. But, nope: Read more »

  • 02 Aug 2013 at 4:27 PM
  • M&A

Dell Pretty Sure That This Time It’s Figured Out This Merger Thing

Did you fly to Round Rock today to vote on Michael Dell and Silver Lake’s buyout of Dell? No, you did not, even I can’t keep up that fiction any more. By my count this is the third same-day cancellation of the special meeting but everyone’s figured out the game by now. Dell will eventually actually hold a shareholder meeting, but no one will come, which will be awkward except not really because nobody really comes anyway. The proxies come, that’s what matters.

Anyway today’s cancellation was because Dell signed a whole new merger agreement, under which: Read more »

  • 01 Aug 2013 at 5:58 PM
  • M&A

Even Carl Icahn Wants To Wrap Up This Dell Thing

Carl Icahn’s ideal literary genre may be the press release – or, possibly, the tweet – but sometimes you want to write at length and filing a 25-page complaint in the Delaware Court of Chancery gives you that luxury. Plus I guess some lawyers to write it, but the complaint Icahn filed against Dell today is pretty Icahn-y, in that it is full of colorful language and doesn’t seem to be all that connected to any, y’know, legal theory. Basically he’s mad at Dell’s board for offering to move the special meeting on the merger to September, so he’s suing to stop them from doing it, even though they haven’t done it. And his theory is that, by moving the special meeting and the associated record date, Dell is putting more votes into the hands of merger arbs, as part of its nefarious plan to convince long-term shareholders to sell by talking down the stock. I found this passage downright poetic: Read more »

I think we can all agree that the Dell board’s latest proposal to its buyout group – to up the price from $13.65 to $13.75, not change the voting rules, but move the vote to mid-September, with an August record date – is a bad idea. I mean I’m sure we can’t all agree on the substance, but just, September? Do you want to be reading about this in September? Sheesh. Carl Icahn has some Herbalife craziness to attend to; let’s wrap this thing up.

The Dell board is in a really weird place, no? It has decided that the thing that is in the best interests of shareholders is to sell to Michael Dell and Silver Lake for $13.65 per share. Shareholders have mixed feelings about the matter, but a majority of them agree, though only a plurality of the shareholders not named Michael Dell agree.1 The board now, in its more or less absolute discretion, gets to choose between: Read more »

A fun thing about being rich is that it expands your opportunities for passive-aggressive sniping. Like, if Michael Dell wants to insult Carl Icahn, he can call up the Wall Street Journal and Bloomberg and say “hey, I was thinking about insulting Carl Icahn, if I do will you print it?,” and of course the answer is yes.1 Or if Carl Icahn wants to insult Michael Dell, he can just tweet his insults like any underemployed 26-year-old, but then he files his tweets with the SEC, which gives them an unusual gravitas, for tweets.

So those boys are having a good time. Their pretext for sniping today is a debate over who should get to vote on the Dell buyout. The current rule is that anyone who owned shares as of June 3 can vote, and that a majority of the non-insider shareholders have to vote to approve Michael Dell’s buyout. Since those rules seem to lead to the deal being voted down,2 and since Carl Icahn opposes the deal, he’s happy with the rules and thinks it’d be a massive betrayal to change them. Michael Dell, unsurprisingly, wants to change them, so as to limit the required vote to a majority of the votes cast and maybe to allow more recent buyers to vote: Read more »

I’m sure this is false but I’m going to carry on believing that someone, somewhere, flew to Round Rock, Texas last week for the Dell shareholder meeting, arrived to learn it was cancelled, got on the next plane back to New York or, I dunno, Switzerland, and then flew in again this morning for the rescheduled meeting, only to find out that it was cancelled again. Cartoon steam is coming out of his ears right about now, though this time at least he’s being compensated for the delay: Read more »

There are enough absurdities on the surface of Carl Icahn’s pseudo-proposal for Dell that you don’t need to think deeply to find more but I guess you could. One thing that might bother you if you let it is the old slicing-the-pie-to-make-more-pie thing. Why should funding Dell with more debt and less equity, and running it with less cash, make it more valuable? Icahn’s plan involves paying shareholders $16 billion in cash in exchange for reducing Dell’s net asset value by $16 billion; the total value of what the shareholders own (Dell shares -> cash + shares) should really stay the same.

This is an argument against all corporate finance structuring and nobody really believes it, though some people come close. Obviously you can make a company more valuable by financial engineering!1 There’s some debate, though, over which sorts of engineering actually work. LBOs? Definitely. (I mean, probably.) Levered recaps? Sometimes, sure. Preferred-stock-funded recaps? Umm. Maybe!

Just some random warrants? No come on that’s nuts.

Anyway here is Icahn’s proposal to throw in some random warrants on top of his random tender offer. It is … random? Here it is, be warned, it’s shouty: Read more »

  • 10 Jul 2013 at 11:42 AM
  • M&A

Carl Icahn: If You Like This Dell Buyout, Why Not Vote Against It?

I’ve made fun of Carl Icahn’s involvement in Dell a few times, because it has been pretty nutty and half-baked, but I hope that doesn’t obscure my fundamental fondness for the man. I sometimes think that we’re a lot alike: we both come to work every day with the goal of being amused by the financial world. He has billions of dollars, though, so he can create his own amusements. But then they become my amusements too, and I’m grateful.

Anyway this is pretty cute:

Dear Fellow Dell Stockholders:

We are in the process of perfecting our right to seek appraisal of our Dell shares and we believe that you should also perfect your appraisal rights. 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. BUT WHAT IS MOST IMPORTANT ABOUT SEEKING APPRAISAL IS THAT YOU CAN CHANGE YOUR 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, as explained below. To add a new twist to an old saying, “you can have your cake and eat it too”.

What is he up to? Read more »