Icahn Makes a Not-Yet-Final Pitch to Win Over Dell Shareholders
In what are probably far from their last comments on the matter, Carl Icahn and Southeastern Asset Management argued to Dell shareholders and to the proxy advisory firm Institutional Shareholder Services that the proposed $24.4 billion leveraged buyout of computing hardware company Dell should be rejected and alternative transactions explored by a new board of directors and management team.
Their case comes in the latest of a dueling set of slide decks filed with the U.S. Securities and Exchange Commission today. Icahn and Southeastern argued that the Dell shareholders are being locked out of a chance to benefit from improvements to Dell’s business prospects that will instead go only to CEO Michael Dell and private equity firm Silver Lake Partners.
“Icahn and Southeastern believe that Dell’s board could have done more — much more — to afford stockholders an opportunity to achieve the very same gains being pursued by Michael Dell and Silver Lake,” they said.
They also attacked the tenure of Michael Dell himself, saying that Dell shares have fallen by about 44 percent since he returned to running the company in 2007 after a stint as chairman, a period during which Dell’s share of the personal computer market fell from north of 14 percent to south of 11 percent.
Icahn and Southeastern say that shareholders opposed to the buyout — including mutual fund company T. Rowe Price and Yacktman Asset Management — control nearly 18 percent of the shares outstanding. That’s a little less than half the shares needed to scuttle the buyout proposal. Under terms of the go-shop process set by a special committee of the company’s board, Michael Dell can’t vote his 15 percent share of the company, meaning about 42 percent of shareholders must vote to approve it.
The latest filings come as the process leading up to a July 18 proxy vote on the buyout proposal begins to wind up. The next major step will come when the proxy firms ISS and Glass Lewis make public their recommendations on the deal. As much as 10 percent of Dell shares may be held by index funds that work on so-called “auto pilot” rules where they vote as ISS and Glass Lewis advise. Another five to 10 percent of shares are heavily influenced by those recommendations.
Here’s the Icahn-Southeastern deck.