Carl Icahn gives up fight to block Dell founder's buyout

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Carl Icahn gives up fight to block Dell founder's buyout

Warwick Ashford

US billionaire investor Carl Icahn has surrendered his bid for computer maker Dell just ahead of a vote by shareholders on the latest buyout offer from company founder Michael Dell.

Carl Icahn entered the fray over Dell's sale in support of shareholders unhappy with Michael Dell’s initial $24.4bn offer, at first teaming up with private-equity group Blackstone in March 2013.

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But in April 2013, Blackstone withdrew because of concerns over an unprecedented drop in PC sales and Dell reduced its operating income projections for the year to $3bn, down from $3.7bn.

Icahn then teamed up with Southeastern Asset Management, offering to pay $12 a share in cash or stock and let investors hold on to equity in the computer maker.

Icahn and Southeastern – which together own 13% of Dell – told the board their offer gave investors a chance to benefit from future growth at Dell, which was more valuable than the buyout proposal.

The war of words between Icahn and Michael Dell has escalated in the past three months, but Icahn has announced he is surrendering because he believes it would be “impossible to win”.

In a letter to shareholders, Icahn blamed procedural issues for his decision to abandon the attempt to block the deal, according to the Guardian.

Observers say Icahn’s withdrawal is likely to mean that Michael Dell and private equity firm Silver Lake Partners will get the go-ahead on their revised $24.8bn offer.

In August, Michael Dell and Silver Lake raised their offer by $0.10 a share to $13.75 to woo investors.

They also promised to pay a special $0.13-per-share dividend by the deal’s closing date if the deal succeeds, in addition to the stock’s regular $0.08 dividend.

Michael Dell wants to take the firm private again so he can pursue his plan to retool the struggling company as a maker of datacentre equipment and software for corporations.

Dell has been hit as consumers switch to mobile devices. Last month it posted its seventh consecutive fall in quarterly profits, with a 72% drop to $204m.

After several delays by Michael Dell and Silver Lake, shareholders are due to meet on 12 September 2013 to vote on whether to accept the deal.


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