Market Overview

Dell Shares Spike and Sell-Off As Carl Icahn Says 'Will Make A Higher Offer By Tomorrow Morning'

Dell Shares Spike and Sell-Off As Carl Icahn Says 'Will Make A Higher Offer By Tomorrow Morning'
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In an interview with Bloomberg television, famed activist investor Carl Icahn reiterated his view that the buyout offer for Dell (NASDAQ: DELL) by CEO Michael Dell and private equity group Silver Lake's offer of $13.65 per share for the company undervalues the company.

He notably said that he "will make a higher offer by [Friday] morning for the stock."

ISS Is "Drinking the Kool-Aid"

Icahn noted that a recent recommendation by influential investor proxy services group ISS that investors side with Michael Dell's offer was akin to the group "drinking that Kool-Aid that Michael Dell has served." Icahn has notably been against the deal and valued the company at as much as $22 per share based on a sum of the parts valuation.

Earlier this week, skepticism rose over the Michael Dell offer as he refused to raise his offer and it was also noted that Dell would need roughly two-thirds of shareholders after himself and those siding with Icahn to vote through his proposal, a massive undertaking.

Third-party analysis done by BCG on behalf of the group led by Michael Dell showed that Dell's valuation was well over-stated at $22 due to comparable analysis with a major competitor, Hewlett-Packard (NYSE: HPQ). Now, Icahn is expected to formally propose an offer for Dell, which he has previously disclosed as a tender offer for the majority of Dell's shares which would leave at least part of the company publicly traded.

New Offer Expected

Icahn said that he plans to make a formal offer by Friday morning for the shares of Dell. He indicated that the revised offer will be for warrants at $20, of which some will be distributed to existing shareholders, in a move that may have disappointed markets.

Shares Pop and Drop

Dell shares rose sharply then sold off in after-hours trading during the tv interview. Dell shares spiked as high as $13.75 from the close of $13.35 before settling near $13.45.

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