Investor Carl Icahn is suing Dell Technologies, alleging that the company refused to provide financial information to shareholders related to its proposed acquisition of VMware tracking stock. This is the latest maneuver in Icahn’s ongoing battle to stop the DVMT deal.
Icahn recently increased his stake in DVMT, the stock that tracks Dell’s controlling stake in VMware, to 9.3 percent, up from his previously disclosed 8.3 percent. He is the second-largest shareholder.
Dell and VMware in July reached a $9 billion deal under which Dell would acquire DVMT. Tracking stock shareholders would receive $109 per share, and Dell would again become a publicly traded company without a formal initial public offering (IPO). But this still requires shareholder approval — a vote is set for Dec. 11 — and Icahn and other shareholders have already said they will reject the deal.
However, Dell recently said an IPO is its backup plan should shareholders vote against the acquisition, and Dell started interviewing several banks in September to discuss underwriting an IPO.
“By repeatedly and publicly invoking the possibility of an IPO, we believe Dell is brazenly suggesting that if the proposed DVMT merger fails, then the company will complete an IPO, which all informed stockholders are aware can be followed by a forced conversion of the DVMT stock into shares of Dell’s newly listed stock,” Icahn said in a statement. “We believe this is a threat blatantly deployed in an attempt to coerce DVMT stockholders to vote in favor of the merger, or else risk the unknown consequences of the forced IPO conversion.”
A Dell spokesperson said the company will file a legal response later today.
“We strongly disagree with the merits and unfounded allegations of Mr. Icahn’s motion,” according to an emailed statement from Dell. “The Class V transaction is the result of a very transparent and thorough process including an independent Special Committee representing DVMT shareholders, which was supported by its own financial and legal advisors. The definitive proxy thoroughly describes our process and was mailed to shareholders.”
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