Icahn Abandons Effort to Prevent Dell Takeover
In an unexpected twist of events, billionaire investor Carl Icahn has thrown in the towel in his heated standoff against tech mogul Michael Dell's attempt to privatize the troubled PC maker.
For months, Icahn fought tooth and nail to thwart Dell's plans, contemplating a "self tender" move where the company purchases its own shares to thwart a hostile takeover. However, delays in shareholder voting and a higher bid from Dell has left Icahn's strategy hang in the balance, impossible to implement.
In a blunt missive to Dell shareholders, Icahn, who is the second-largest shareholder in the company, accused the proposed offer by Dell and Silver Lake Partners of freezing stockholders out of any chance to tap into Dell's immense potential. Yet, Icahn and Southeastern Asset Management, an investment firm that supported his rival bid, have decided to call it quits on their campaign.
"Though we remain adamantly opposed to the Michael Dell/Silver Lake freeze-out deal, given the new record date, the altered shareholder composition, the modified voting standard, and the Board's refusal to combine the Annual Meeting and Special Meeting, Southeastern and Icahn will refrain from bolstering further attempts to torpedo the agreement," Southeastern announced in a statement.
After a series of recommendations from Dell's board, shareholders are urged to endorse the Dell/Silver Lake Partners proposal of $15.7 billion. If approved, the company will be taken out of the public eye and transformed into a private entity. Leading advisory firms have concluded that a sale of Dell for $13.88 per share in cash serves the best interests of Dell shareholders, according to Dell's board.
Michael Dell has contended that this maneuver will enable him to spearhead the drastic transformation that the company needs. Faced with a slump in PC sales, Dell has dedicated $13 billion on acquisitions to transform itself into an "end-to-end" enterprise IT provider, acquiring companies like IT management provider Quest Software, thin client vendor Wyse, and security supplier SonicWall.
Despite these strategic moves, the company's financials have yet to bounce back. Last month, Dell reported its seventh consecutive quarterly fall in profits. The PC market, too, remains in shambles, with the industry facing its longest market contraction on record, as reported by the IDC.
Icahn, who holds a significant stake in Dell's business, expressed his frustration towards the proposed deal by Dell and Silver Lake Partners, stating that it hinders shareholders from capitalizing on Dell's potential. After a series of obstacles and the refusal of Dell's board to combine meetings, Icahn and Southeastern Asset Management, his strong ally, have decided to withdraw their campaign in the finance sector, ending their resistance against the proposed privatization of Dell, which is expected to involve technology acquisitions to aid Dell's business transformation.
