Icahn gives up Dell fight [Austin American-Statesman]
(Austin American-Statesman (TX) Via Acquire Media NewsEdge) Sept. 09--Billionaire activist investor Carl Icahn acknowledged defeat Monday in his bid to block the management-led buyout of Dell Inc.
Icahn, along with other disgruntled investors, had put the $24 billion-plus deal in doubt for much of the summer, forcing three delays of special shareholders meetings in July and early August.
But would-be buyers CEO Michael Dell and his investment ally Silver Lake Partners regained momentum when they enhanced their original offer and agreed with the Dell board of new voting rules for the approval of the deal.
Because of those changes and an unfavorable court ruling in Delaware, Icahn concluded he couldn't block the Michael Dell/Silver Lake bid.
"We have determined that it would be almost impossible to win the battle on Sept. 12," which is the shareholder's meeting set for Thursday morning in Round Rock, Icahn's letter started.
"We have therefore come to the conclusion that we will not pursue additional efforts to defeat the Michael Dell/Silver Lake proposal, although we will still oppose it," the letter continued. Rather than fight the buyout, Icahn indicated he will seek relief in the Delaware courts through seeking "appraisal rights" as part of a court procedure that attempts to gain a value for a stake in a company that is sold.
Icahn's letter appears to open the path for the Michael Dell buyout to easily win approval on Thursday, analysts said.
"It looks like a done deal for Michael Dell," said Austin investment adviser Jim Nolen.
"After the ruling in the (Delaware) court case, Icahn was done," said analyst Rob Enderle with the Enderle Group. "It was just a matter of admitting he was done."
Enderle added that there was "no doubt" that the buyout will be approved on Thursday.
If that happens, then Michael Dell and Silver Lake are expected to complete their purchase of the company and take it private in the next several weeks ending the company's 25-year run as publicly corporation. Michael Dell has said repeatedly that the company needed to be taken private to speed the transformation process that it needs to undertake to succeed in a fast-changing environment for information technology.
Icahn acknowledged defeat Monday and threw out a few insults for Dell's board. He termed the board's decision to postpone previous shareholder meetings as "an action worthy of Vladimir Putin."
"The Dell board, like so many boards in this country, reminds me of Clark Gable's last words in 'Gone with the Wind,' Icahn wrote. "They simply 'don't give a damn.' "
"I realize that some stockholders will be disappointed that we do not fight on," Icahn stated. "However, over the last decade, mainly through 'activism,' we have enhanced stockholder value in many companies by billions of dollars. We did not accomplish this by waging battles that we thought we would lose. Michael Dell/Silver Lake waged a hard-fought battle and, according to Chancellor (Leo) Strine (the Delaware judge), the actions by Dell were within the Delaware law. We therefore congratulate Michael Dell and I intend to call him to wish him good luck (he may need it)."
Dell Inc. spokesman David Frink said the company had no comment on Icahn's letter.
Icahn emerged as a challenger to the buyout in March after the Dell Inc. board accepted a preliminary buyout offer from Michael Dell and Silver Lake in February. Dell Inc.'s board then entered into a "go shop" period to explore whether a better offer might be found.
Icahn and Southeastern Asset Management, a longtime Dell Inc. shareholder, joined to fight the buyout and attracted other major shareholders who claimed the buyout price -- $13.65 a share -- was undervaluing the company. While Icahn offered three separate proposals to reorganize the company's finances and buy most Dell Inc. shares, the board said it did not judge any of them to be a "superior offer" to the one made by Michael Dell. Together, Icahn and Southeastern together owned nearly 12.9 percent of the company, and they found supporters among other large shareholders, including T. Rowe Price Group.
The extent of shareholder discontent created considerable doubt in July that the buyout would pass. Three special shareholder meetings in Round Rock were adjourned without a vote in July and early August, before Michael Dell and the board's special committee announced an enhanced offer that raised the buyout price and changed the rules for approval of the buyout. The new rules don't count abstaining votes as "no" votes.
The revised buyout price was $13.75 a share, plus a 13-cent special dividend to be paid by the company.
Southeastern Asset Management issued its own letter thanking stockholders for their support and criticizing actions of the special committee to Dell's board of directors, which managed the buyout process.
"Southeastern strongly believes that by agreeing to the revised Michael Dell/Silver Lake proposal and trading away what was perhaps the most important "unwaivable" shareholder protection included in the merger agreement, the Dell special committee did a disservice to stockholders. We continue to believe that the Michael Dell/Silver Lake transaction significantly undervalues the company and its prospects and denies stockholders the opportunity to participate in Dell's significant upside potential."
Dell, which became a public company in 1988 and saw a dramatic rise in its stock price during the 1990s, is the third largest maker of personal computers with more than 100,000 workers worldwide and about 14,000 in Central Texas, where it is the largest private employer.
The company has said that part of its plan for revitalization includes bolstering its portfolio of advanced hardware, software and services, strengthening its global sales force and enhancing the experience that its customers have in dealing with it.
Dell Inc.'s stock was unchanged Monday, closing at $13.84.
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