Carl Icahn gives up fight to take control of Dell

By on September 9, 2013, 5:00 PM
dell, michael dell, shareholders, private, silver lake, carl icahn, investor

Activist investor Carl Icahn has given up his fight to take control of Dell. It puts an end to a 14-month-long episode that saw Icahn battle with founder and CEO Michael Dell over the fate of one of the world’s top sellers of PCs.

Icahn announced the news via a letter to shareholders. In it, he said he would continue to oppose the deal that Michael Dell has placed on the table. The founder, along with private equity firm Silver Lake, will pay roughly $25 billion to purchase all outstanding shares in Dell in an effort to take it private.

Terms of that deal came about after Icahn proposed to recapitalize Dell by buying 72 percent of shares, paying a special dividend to shareholders and issuing warrants to purchase additional shares at a later date.

The biggest hurdle to reaching a deal thus far was a clause in the original plan that would count a non-vote from a shareholder as a negative vote against the deal. Realizing they might not have a shot under this method, Dell and company sweetened the deal by raising the offer per share from $13.65 to $13.75 and agreeing to issue a one-time dividend for shareholders in exchange for modifying the way votes are tallied. The new arrangement will see that only votes that are actually submitted will count toward the final tally.

The revised plan is set to go before shareholders at a special meeting this Thursday.




User Comments: 6

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wastedkill said:

Hmm I thought it was michael dell that wanted to buy his company back not carl icahn xD

ikesmasher said:

Same here. This article is confusing me.

Chazz said:

Hmm I thought it was michael dell that wanted to buy his company back not carl icahn xD

Michael Dell wants to buy his company back and go private. One of his share holders didn't like the idea and offered a competing bid. He doesn't like the plans Dell has set out. The article is stating that the investor is backing out and leaving Dell's offer as the only offer.

wastedkill said:

Michael Dell wants to buy his company back and go private. One of his share holders didn't like the idea and offered a competing bid. He doesn't like the plans Dell has set out. The article is stating that the investor is backing out and leaving Dell's offer as the only offer.

Ah ok xD Well tbh if the revenue for dell really is $50billion then he should easily be able to pay the loans back in a year right? Also in a business sense it kinda seems worth it to keep it private specially if your wanting to grow the company to become massive.

$50billion all to yourself seems like a big amount of cash! having that split to investors must hurt haha

MilwaukeeMike said:

Ah ok xD Well tbh if the revenue for dell really is $50billion then he should easily be able to pay the loans back in a year right? Also in a business sense it kinda seems worth it to keep it private specially if your wanting to grow the company to become massive.

$50billion all to yourself seems like a big amount of cash! having that split to investors must hurt haha

Just because Dell makes $50bln in revenue every year doesn't mean they have $50 bln to spend. Those computers they sell cost money for parts and assembly. Last year Dell made $57bln, but it cost them almost $45 bln to do it. After other expenses and taxes they were left with only $2.3 bln left over.

Making a company private doesn't help it grow, it helps them not have to turn profits quarter after quarter to keep shareholders happy. A private company is more able to focus on the long term and accept losses for a few years while they change gears. Perhaps Dell is going to move into mobile or consulting and it'll take a few years to make it profitable. Going private will mean he won't have bad press and unhappy shareholders while he makes it work.

The PC market is on the way down. Dell knows it and is probably going private to allow the company to move into something else before they fade away. Sure, there's nothing wrong with just being a smaller PC maker, but he's probably got a lot of employees that he can't keep if they only sell half as many PCs.

If a company wants to get big fast, one of the things it can do is go public. Going public raises a lot of money for the company as it's equity is sold off to investors.

Skidmarksdeluxe Skidmarksdeluxe said:

I wonder what his new catch phrase will be? "Yes Icahn" comes to mind.

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