INTERNATIONAL - Dell Technologies said it was sticking to its plans to go public by buying back its tracking stock, a day after activist investor Carl Icahn opposed the move.
Icahn reported an increased 8.3 percent stake in Dell tracking stock on Monday, saying he intends to do everything in his power to thwart the computer manufacturer’s plans.
Dell in July announced a $21.7 billion cash-and-stock deal to buy back shares tied to its interest in software provider VMware.
“Dell Technologies continues to believe that the proposed offer for DVMT shares ... is fair and in the best interests of DVMT shareholders,” a Dell spokesperson said in an email.
Carl Icahn increases stake in Dell IPO standoff
Icahn and other hedge fund investors have resisted the plan, saying the proposed deal massively undervalues the tracking stock.
“I intend to do everything in my power to STOP this proposed DVMT merger,” Icahn said in an open letter to stockholders. “It is better to have peace than war, but be assured, I still enjoy a good fight for the right reasons.”
Dell said earlier this month that it had met with some investment banks to explore an initial public offering if its plan to buy the tracking stock of VMware falls through.
Elliott Management Corp and Canyon Capital Advisors have also resisted Dell’s effort to buy back the “tracking stock” from them, arguing that Dell’s offer inflates its own value and discounts the tracking stock’s value.
A tracking stock tracks, or depends, on the financial performance of a specific business unit or operating division of a company, rather than the operations of the issuer as a whole.
Icahn previously owned 1.2 percent in Dell tracking stock, and the latest stake would make him the second largest shareholder in the Dell tracking stock.
Icahn said the best way forward would be to offer a competing partial bid that provides partial liquidity without forcing a merger, adding that he was looking at interested parties, including financing sources, who may want to finance such a bid.