Carl Icahn Ends Fight to Stop Dell Buyout

Activist investor, Carl Icahn decided to end the fight to stop the buyout proposal of Michael Dell and Silver Lake Partners to take Dell Inc (NASDAQ:DELL) private.

In a letter to his fellow shareholders on Monday, Icahn admitted that it is “almost impossible” to beat the offer of Mr. Dell’s buyer group after the company changed its voting rules. Shareholders are scheduled to vote on the approval of the buyout proposal on Thursday, September 12. The activist investor maintained his position that the consortium’s proposal “greatly undervalues” the business of the PC maker.

Under the new rules of Dell, it will only count the votes casted and it will no longer tally the shares not voted during the approval process as “no” or against the proposal.  The company rescheduled the voting for the bid over concerns that shareholders might reject it.

“We have therefore come to the conclusion that we will not pursue additional efforts to defeat the Michael Dell/Silver Lake proposal, although we still oppose it and will move to seek appraisal rights,” according to Icahn in his letter.

With regard to the postponements of the voting process for the proposal, Icahn compared Dell’s action to a dictatorship. He said, “We jokingly ask, ‘What’s the difference between Dell and a dictatorship? The answer: Most functioning dictatorships only need to postpone the vote once to win.”

In an interview with CNBC, Icahn said it was just too difficult to win the battle against Mr. Dell’s group given the situation. But the activist investor emphasized, “We tried and at least have the solace to know that we got all the shelves, that’s another $600, $700 million in my calculation with the dividend, so we did the work the board should have been doing.”

Icahn added, “I’ve never seen a situation that points out the need for better corporate governance in this country.”

Furthermore, the activist investor said he understands the actions of Mr. Dell. He also understands self-interest, but he cannot understand the board of PC maker. He pointed out, “I can’t understand a board that’s supposed to have a fiduciary obligation to shareholders to just throw it away the way they did it.”

Moreover, Icahn also mentioned during the interview that a top executive already agreed to serve as CEO of Dell if they will be able to win takeover proposal, however he said that the executive suddenly gave up. According to Icahn, if the top executive did not back out, his group could have raised their bid for Dell.