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.
With CNBC in the U.S., CNBC in Asia Pacific, CNBC in Europe, Middle East and Africa, CNBC World and CNBC HD , CNBC is the recognized world leader in business news and provides real-time financial market coverage and business information to approximately 390 million homes worldwide, including more than 100 million households in the United States and Canada. CNBC also provides daily business updates to 400 million households across China. The network's 16 live hours a day of business programming in North America (weekdays from 4:00 a.m. - 8:00 p.m. ET) is produced at CNBC's global headquarters in Englewood Cliffs, N.J., and includes reports from CNBC News bureaus worldwide.
CNBC also has a vast portfolio of digital products which deliver real-time financial market news and information across a variety of platforms. These include CNBC.com, the online destination for global business; CNBC PRO, the premium, integrated desktop/mobile service that provides real-time global market data and live access to CNBC global programming; and a suite of CNBC Mobile products including the CNBC Real-Time iPhone and iPad Apps.
Members of the media can receive more information about CNBC and its programming on the NBC Universal Media Village Web site athttp://www.nbcumv.com/mediavillage/networks/cnbc/