Michael Dell in dilemma as Icahn ups his ante to raise offer price

Ever since Dell's founder Michael Dell announced his intention to make the company private together with private equity firm Silver Lake and fixed the deal price at $ 13.65 per share summing to $ 24.4 bn it has gone into some rough weather with section of shareholders. During the deal's ‘go shop' period, many other potential investors have evinced keen interest participating in the deal and Dell's biggest stakeholder and owner of Icahn Enterprises, Carl Icahn has from the beginning challenged the deal offer price and said it was way to undervalued and has termed that Dell's shareholders will defeat the deal.

With Michael Dell's deal already getting divided among shareholders led by Icahn, a latest development puts the deal further in a tight spot. It may be recalled a special committee has been formed to protect Dell's shareholders interest, so that they can support the best possible option. According to a latest Reuters report it said, "The PC maker's special committee told Dell's founder and chief executive a few days ago that he should raise his offer if he wants it to succeed"

It is interesting that the special committee has asked Dell to raise the offer as investment advisory firm- ISS is expected to announce its final recommendation on the deal whether its best for the shareholders or not.

The Reuters report also says that, "The special committee's move came as Icahn and his affiliates disclosed on Tuesday they had provided $3.42 billion, or 66% of the debt financing to back his bid for Dell. Investment bank Jefferies & Co provided $1.6 billion, or 30% of the overall $5.2 billion in committed financing with the remainder of about $179 million coming from 14 institutional funds, including pension funds and insurance companies, according to a US Securities and Exchange Commission filing."

So clearly the Icahn camp is getting serious and on the contrary to initial perception that Icahn is not serious about participating in the deal rather his intention is to increase the offer price. Now with this debt financing plan, it looks they have good ‘leveraged recapitalization plan'.

In all on June 18th, Dell's shareholders will vote on this deal- whether they will go for what the company's founder proposed or will go the other way is the question that still lingers on.