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Breaking News from CNBC's David Faber: Icahn Likely Amassed A Dell Position That May Approach 100M Shares - Sources

Wednesday, 6 Mar 2013 | 3:01 PM ET

WHEN: TODAY, WEDNESDAY, MARCH 6TH

WHERE: CNBC'S "STREET SIGNS"

Following is breaking news from CNBC's David Faber. All references must be sourced to CNBC.

CNBC'S DAVID FABER:

CARL ICAHN APPEARS SET TO ENTER THE FRAY OVER THE LEVERAGED BUYOUT OF DELL. TRADING SOURCES TELL ME THEY ARE CONFIDENT THAT ICAHN HAS AMASSED A POSITION IN DELL THAT MAY APPROACH 100 MILLION SHARES AND IF SO OF COURSE WOULD BRING HIM TO A ROUGHLY 6% OWNERSHIP OF THE COMPUTER MAKER. HE IS EXPECTED TO FILE A 13D ON DELL VERY SOON AND HAS PURCHASED CONTROL OF HIS SHARES OVER THE LAST TWO WEEKS AS DELL'S SHARES HAVE TRADED NEAR $14 OF COURSE ABOVE THE $13.65 LBO.

WHEN REACHED FOR COMMENT, ICAHN TOLD ME HE WOULDN'T DISCUSS DELL OR ANY RATIONALE HE HAD FOR THE INVESTMENT. HOWEVER, PEOPLE FAMILIAR WITH THE SITUATION, TELL ME ICAHN HAS MET WITH ADVISORS FOR DELL'S SPECIAL COMMITTEE AND URGED THEM TO PURSUE A LEVERAGED RECAP OF THE COMPUTER MAKER, RATHER THAN THE $13.65 A SHARE LEVERAGED BUYOUT THAT IS CURRENTLY BEEN AGREED TO BETWEEN DELL'S SPECIAL COMMITTEE AND FOUNDER MICHAEL DELL AND LBO FIRM SILVERLAKE. ADVISORS TO THE SPECIAL COMMITTEE ASKED ICAHN TO SIGN A CONFIDENTIALITY AGREEMENT AND JOIN THE GO SHOP PROCESS NOW BEING CONDUCTED BY THE SPECIAL COMMITTEE AND ITS INVESTMENT BANK EVERCORE, BUT HE HAS YET TO DO SO.

WHAT IS MORE LIKELY IS THAT ICAHN WILL COME OUT AGAINST THE DEAL AND ARGUE IN FAVOR OF DELL LEVERING UP ITS BALANCE SHEET TO PAY SHAREHOLDERS A SIGNIFICANT ONE TIME DIVIDEND. THAT IS THE PLAN BEING ESPOUSED BY DELL SHAREHOLDER SOUTHEASTERN ASSET MANAGEMENT, WHICH HOLDS 8.4% OF THE COMPANY AND IS ACTIVELY TRYING TO ORGANIZE SHAREHOLDERS TO VOTE THE DEAL DOWN. THAT VOTE WILL REQUIRE A MAJORITY OF THE SHARES NOT OWNED BY MICHAEL DELL TO VOTE IN FAVOR AND WITH ICAHN POTENTIALLY ADDING A 6% BLOCK TO THE AGAINST COLUMN, APPROVAL OF THE DEAL WITHOUT A SIGNIFICANT BUMP FROM THE BUYOUT PARTY BECOMES LESS LIKELY. ALTHOUGH TO BE FAIR WE STILL HAVE ANOTHER QUARTER OF EARNINGS TO COME FROM HERE AND A VOTE HAS YET TO EVEN BE SET. ICAHN HAS WORKED WITH SOUTHEASTERN IN THE PAST ON CHESEPEAKE ENERGY, BUT AT THIS POINT THERE IS NO SIGNS THE TWO HAVE BEEN PAIRED AS YET ON A SHARED VISION FOR DELL OR IN FACT TRYING TO ARGUE AGAINST THE DEAL TOGETHER.

DELL'S SPECIAL COMMITTEE HAD CONSIDERED A LEVERAGED RECAP AMONGST OTHER THINGS AS IT NEGOTIATED WITH MICHAEL DELL AND SILVER LAKE, BUT THE SPECIAL COMMITTEE FELT IT WAS HIGHLY RISKY TO TAKE ON SUCH A LARGE AMOUNT OF DEBT NOT TO MENTION WHETHER IT COULD EVEN GET THE FINANCING FOR THAT KIND OF DEBT PERHAPS $8, $9 BILLION ADDED TO THE BALANCE SHEET TO BE THEN PAID OUT TO SHAREHOLDERS THEY WORRIED ABOUT THAT GIVEN WHAT IS STILL VERY MUCH A BUSINESS IN TRANSITION AND ONE WITH A GREAT DEAL OF DOWNSIDE RISK. NONETHELESS THIS IS GETTING MORE AND MORE INTERESTING BY THE MOMENT.

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