What is Icahn up to with Dell?

March 7, 2013, 2:04 AM UTC

FORTUNE — CNBC is reporting that Carl Icahn has acquired a 6% stake in PC maker Dell Inc. (DELL), which has agreed to be taken private for $24 billion by CEO Michael Dell and private equity firm Silver Lake Partners.

If true, it would be a massive outlay — currently valued in excess of $1.4 billion. It also would make Icahn the company’s third-largest shareholder, behind Michael Dell and Southeastern Asset Management. And, if CNBC is correct that Icahn opposes the buyout, then the company’s three largest outside shareholders are planning to vote nay.

So why is Icahn trying to scuttle the deal, when its failure almost certainly would cause the company’s shares to plummet?

Here are three options:

1. CNBC posits that Icahn is agitating for a leveraged recap rather than a leveraged buyout. Ask the banks to direct their $15 billion in loans (or perhaps a bit less) to a still-public Dell, and then use it to pay out a massive dividend. After all, if Dell can handle the extra debt as a private company, why not as a public one? The only big downside here is that you’d be left with a public company CEO (Michael Dell) who has been screaming from the mountaintops that he doesn’t want to be a public company CEO. It’s kind of like if the 49ers used their franchise tag on a player who tells everyone how much he hates living in San Francisco. The guy will probably keep doing the job, but an unhappy star is likely to become less productive.

2. Icahn may be trying to put pressure on Michael Dell to improve his $13.65 per share offer, something he certainly is in the financial position to do (even if Silver Lake isn’t). The only issue with this scenario is that it would seem to provide Icahn with a fairly thin upside. The stock has been trading above the buyout price for weeks. In other words, Icahn would have to be betting that Michael Dell is willing to up his offer by a matter of dollars, not cents.

3. Maybe Icahn actually wants in on the buyout, and his opposition is about creating leverage. This seems unlikely — Icahn isn’t known for being a minority participant in LBOs — but perhaps he shares a vision with Silver Lake. And it wouldn’t be unreasonable for Dell to let some of its largest outside shareholders in the door (without board seats), in order to basically buy off the opposition.

UPDATE: Icahn is officially requesting a $9 per share special dividend, according to a new Dell filing with the SEC. It either would be funded through company cash, receivables and/or new debt. He adds that if the current buyout is voted down and the Dell board chooses not to accept Icahn’s recommendation, then he will nominate a new slate of directors.

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