What the Dell is going on?

Dell (DELL – $13.32) is all over the business networks today as Carl Icahn is upset over a plan where Michael Dell will get to take his namesake company private.  Icahn’s alternative plan would pay shareholders for shares along with a portion of the company remaining public.

So who are the players here?

Team Let’s Go Private (Dell)

Dell has teamed up with Silver Lake Partners in his bid to take DELL private.

Michael Dell – the founder of Dell computer and has an estimated net worth of over $15 billion.  He started Dell in a dorm room at the University of Texas.  Dell owns about 16% of DELL shares.

Silver Lake Partners – is a technology focused private equity firm that was originally founded during the Internet bubble in 1999.  They differed from most technology oriented private equity firms that popped up at that time by focusing more on mature companies than pure start-ups.

Team Let’s Stay Public (Icahn)

Carl Icahn – an activist investor that takes large stakes in companies where he believes value can be realized in a variety of ways.  There is not enough space here to list all the deals he has been involved in.

Southeastern Asset Management – is a traditional investment firm based in Memphis, TN.  The firm is the largest independent shareholder in DELL.

Together Icahn and Southeastern own 13% of outstanding DELL stock.

The plans

Dell would like to take the company private at 13.65 a share.  This deal was announced in February and the stock has recently been trading around $13.30 which has been an indication that the deal was likely to go through.

Icahn believes that Dell’s plan undervalues the company and he has proposed large cash dividend of $12.00 a share along with keep in the company public.  The feeling is that this puts a value of $15.00 per share.

In addition to watching the headlines and business networks to keep up with the ongoing saga check out option trading on DELL today.  If a trader believes Icahn’s deal is going to prevail then they may try to buy slightly out of the money call options.  Conversely, if a trader believes Michael Dell’s plan will win out then there are alternative strategies that may be implemented depending on where DELL is trading today.  Either way, this will be a fun one to watch.  Let the games begin.