Chip East/ReutersCarl Icahn has gained a major stake in Dell but is dissatisfied with the buyout, according to a person briefed on the matter.11:17 p.m. | Updated
The shareholder opposition to the $24.4 billion buyout of Dell is growing louder.
Carl C. Icahn, the longtime activist investor, is planning to unveil a major stake in the troubled computer maker, a person briefed on the matter said on Wednesday. As with other investors, he is expected to express dissatisfaction with the price, the person said.
With Mr. Icahn joining the opposition, the Dell deal faces longer odds.
The buyers — the company’s founder, Michael S. Dell, and the private equity firm Silver Lake — contend that the deal is the best option for Dell in an increasingly competitive marketplace. Shares of the company have languished as its core personal computer business has eroded.
But big investors balked at the offer of $13.65 a share, saying it undervalued Dell. Two of the company’s biggest outside investors, Southeastern Asset Management and T. Rowe Price, have already said that they will not support the current bid, as have a handful of smaller shareholders. Together, Southeastern and T. Rowe Price own more than 14 percent of Dell. It is not clear how big a position Mr. Icahn has amassed, although CNBC has reported that his stake is over 6 percent.
As part of the deal agreement, a majority of Dell’s independent shareholders must approve the buyout. Mr. Dell, who controls about 16 percent of outstanding shares, will not get to cast a vote.
Mr. Icahn has already met with advisers to a special committee of Dell’s board to discuss the deal, according to the person briefed on the matter. The directors had asked Mr. Icahn to participate in the process to find potential higher bids, which is scheduled to end on March 22. But Mr. Icahn refused, the person said.
Mr. Icahn could not be reached for comment. Representatives for Dell and Southeastern declined to comment on Mr. Icahn’s plans.
With the pressure mounting, Dell has gone on the defensive.
On Wednesday morning, the special committee issued a statement, telling shareholders that it had fought hard to get the highest price. “We negotiated aggressively to ensure that stockholders received the best possible value,” the committee said.
The committee also said it had requested a number of provisions meant to help any competing bidders make a higher offer. For example, Dell will reward the investment bank Evercore Partners if it finds a better offer.
Several companies already have signed nondisclosure agreements to take a peek at Dell’s books as part of the so-called go-shop period, according to the person briefed on the matter. Hewlett-Packard, Lenovo and the Blackstone Group have all expressed interest.
The special committee, which handled the negotiations with Mr. Dell’s group, added that it had considered several possible alternatives to the sale, including a transaction known as a leveraged recapitalization. In such a deal, the company would borrow billions of dollars to pay out a special dividend, but Dell would remain publicly traded.
Both Mr. Icahn and Southeastern have advocated such a move, which they said would generate more value for shareholders. Mr. Icahn has told Dell’s special committee that it should consider paying about $9 a share, while Southeastern has recommended a dividend of $12 a share.
People close to the committee have warned that the company’s shares may tumble if the deal dies. Driving Mr. Dell’s bid is the belief that the company cannot successfully continue its transformation from a PC maker into an enterprise software provider as a public company.
But Southeastern has disagreed, arguing that the company had already begun its turnaround and was worth more than $20 a share.
People close to Southeastern have said that the firm was prepared to risk seeing Mr. Dell’s offer die rather than accept what it believed was an undervalued bid.
For much of the last month, shares in Dell have traded above the offer price, suggesting investors are anticipating an improved offer from its founder. Shares closed on Wednesday at $14.32.
Analysts and people involved in the deal process believe a significant amount of Dell’s shares — over 20 percent, by one count — are now in the hands of hedge funds betting on the buyout’s prospects.