Carl Icahn is really rich. His net worth is some $20 billion, making him the richest guy on Wall Street. That doesn’t just mean that he’s winning some score-counting game because at age 77 Icahn is not just relaxing, he is using his vast wealth to back his brand of activist investing.
This was Forbes Magazine’s main point, simple yet consequential, when it put Icahn and his newly grown beard on the cover earlier this year. “Right now,” Icahn told me in March while waving around an aluminum ruler, “without selling anything, we can write a check for about $10 billion.” In that same article, Keith Meister, a former Icahn lieutenant who now runs his own $2 billion-plus hedge fund, pointed out that Icahn “has the guts to do things in size and make big bets, and, frankly, he has more money now than ever.”
Yet a lot of people watching Icahn circle Dell DELL -0.49% in recent weeks seemed to dismiss him. They focused on Icahn’s apparent difficulty in securing financing in his effort to counter Michael Dell’s buyout for the company. But this week Icahn put his war chest to work. Icahn and his affiliates are now ready to provide $3.42 billion of debt financing, two-thirds of the capital needed, to back Icahn’s leveraged recapitalization plan for Dell. “We put an end to the unwarranted speculation by Dell that our money would not be available,” Icahn said.
Icahn is the only reason that Dell’s special board committee, which is charged with evaluating what’s in the best interest of Dell’s shareholders, has already gone back to Michael Dell and advised him to raise his $24.4 billion offer for the company, a deal in which he is partnering with private equity firm Silver Lake.
There are still people whispering that Icahn’s inability to secure more bank financing shows he is not serious about his plans for Dell and he is only trying to force Michael Dell to pay more for the PC maker since Icahn owns a big stake in the company. It will be interesting to see if Dell will increase his bid before Institutional Shareholders Services, an influential shareholders advisory firm, makes its recommendation on his deal. The ultimate shareholder vote on Michael Dell’s buyout proposal is scheduled for July 18.
Icahn claims that Dell’s bid is too cheap and instead is proposing a leveraged recapitalization of the company in which shareholders would tender 1.1 billion shares for $14 each, which is more than the $13.65 a share Dell and Silver Lake are offering.