Icahn and Southeastern try to hamstring Mike Dell's buyout bid
'IT IS NOT TOO LATE TO DO THE RIGHT THING, DELL BOARD'
Investor Carl Icahn and fund Southeastern Asset Management have proposed an alternative to the Mike Dell-led buyout of Dell.
In a letter to the PC firm's board, Icahn and Southeastern said they reckoned Dell shareholders should get the option to hang onto holding stock in Dell and take an additional $12 in shares or cash.
The plan aims to stop Dell the man and partners Silver Lake from going through with their $24.4bn bid to take the company private, a deal that the latter branded the "Great Giveaway".
"We want this Board to hear from both Icahn and Southeastern loud and clear that it is insulting to shareholders’ intelligence for the Board to tell them that this Board only has the best interests of shareholders at heart, and then accept Michael Dell’s offer to purchase the company he founded for $13.65 per share, a price far below what we consider its value to be," the letter, filed with the SEC, said.
"You not only sanctioned Michael Dell’s offer, which amazingly allows him to purchase the company from shareholders with their own money but, to add insult to injury, you have agreed to give Mr Dell a break-up fee of up to $450 million."
Icahn and Southeastern, which hold a 13 per cent stake in the firm versus Mike Dell and co's 16 per cent, said that there was still plenty of mileage left in the firm, outside of PCs, which are not where its "ultimate long-term opportunity lies".
"Dell has a meaningful opportunity to upgrade its overall global operations. This includes reining in years of excessive and bloated overhead, marketing and supply chain costs as highlighted by the Boston Consulting Group," the investors said in the letter.
They added that Dell could thrive as a public company if it moves from making computers to providing enterprise services.
"Dell just needs the right management team in place to execute on the opportunity we have laid out, a team that is incentivised to work for all shareholders and not just themselves - a team that we believe a new board operating outside of the constraints of this hostile situation, could certainly assemble," they said.
Icahn and Southeastern Asset Management also threatened the board with litigation if they agreed to Mike Dell's offer and the transaction turned out to "be a home run" for him.
"IT IS NOT TOO LATE TO DO THE RIGHT THING, AND THEREBY ANSWER THE ONGOING CRITICISM AND LEGAL ATTACKS THAT THE GOING PRIVATE TRANSACTION HAS ATTRACTED," the letter shouted. ®