Icahn Blasts Dell’s “Unconscionable” Board, Calls for End to Vote Delays
With the vote on the Dell buyout a little more than 24 hours away — allegedly — there was no way we weren’t going to hear from Carl Icahn.
Icahn made what could turn out to be his last pitch to shareholders — that is, if Dell doesn’t delay the vote tomorrow as it has been reported it might — in opposition to the $24.4 billion buyout of the company by its founding CEO Michael Dell and private equity firm Silver Lake. The forum was another one of his lunchtime open letters to shareholders.
Icahn sought to ratchet up the pressure on the special committee of the company’s board, accusing it of hiding behind business judgment rules in the wake of last week’s delay of a shareholder meeting when the vote was originally scheduled. He called the board “unconscionable,” and referred to the ongoing drama regarding the company’s fate as a “desperate debacle.”
Dell shares are trading down below $13 again, down nearly one percent in midafternoon trading.
Here’s the letter.
Icahn and Southeastern Issue Open Letter to Dell Special Committee
New York, New York, July 23, 2013: Carl C. Icahn and his affiliates and Southeastern Asset Management today issued the following letter to the Dell Special Committee.
Ladies and Gentlemen:
In our years in business we have witnessed many unconscionable boards. But, we think that the ongoing “Desperate Dell Debacle” stands out as one of the most startling examples. Amazingly, through it all, the Special Committee continues to remind us just how much they believe that they are taking care of us, watching out for us and protecting us. We have a number of questions for these self-congratulatory champions of Dell stockholders.
WHY FREEZE OUT DELL STOCKHOLDERS?
Why is the Special Committee so committed to forcing loyal Dell stockholders out of Dell so that our company can be sold to Michael Dell/Silver Lake at what we believe is a bargain price?
How long can boards push out and change meeting dates and hide behind the “business judgment rule”?
The answer, my friend, is “Blowin’ in the Wind”.
WILL THE SPECIAL COMMITTEE KEEP ITS PROMISE?
On July 16 the Special Committee told us that it has “taken extraordinary measures to ensure Mr. Dell’s neutrality and to leave the final decision with the disinterested stockholders.”
If you believe the Special Committee did not take “extraordinary measures to ensure Mr. Dell’s neutrality and to leave the final decision with the disinterested stockholders” when they postponed last Thursday’s vote, then we urge you to vote AGAINST the Michael Dell/Silver Lake transaction. If you believe the Special Committee did not take “extraordinary measures to ensure Mr. Dell’s neutrality and to leave the final decision with the disinterested stockholders” when they refused to hold the Annual Meeting on the same date as the Special Meeting, then we urge you to vote AGAINST the Michael Dell/Silver Lake transaction.
The Special Committee asserts that they have taken “extraordinary measures to ensure Mr. Dell’s neutrality”,
1) When Michael Dell/Silver Lake decided that they wanted to buy Dell, the Special Committee negotiated a Merger Agreement with them to freeze out stockholders.
2) The Special Committee agreed to a Merger Agreement that, in our opinion, through a combination of the restrictive definition of Superior Proposal, a break up fee of up to $450 million, a matching right in favor of Michael Dell/Silver Lake, and other Michael Dell/Silver Lake friendly provisions, acted as an enormous barrier to any potential bidder.
3) In seeking to obtain stockholder votes, Dell has embarked on a pattern of scare tactics, disclosing increasingly negative results and prospects. But we believe that a number of operational decisions at Dell have created much of this bad news. And why does the Dell Board forget to mention the $13 billion spent on enterprise software that is just beginning to show excellent results? In our opinion and the opinion of a number of experts we have spoken to, Dell’s enterprise software and cloud computing have enormous potential. Why can’t all stockholders benefit from this?
4) To top it all off, after promising on July 16 to “leave the final decision with the disinterested stockholders” the Board adjourned the July 18 meeting. Whatever happened to the July 16 promise to “leave the final decision with the disinterested stockholders”? Again we ask why does this Board keeps protecting Michael Dell even after stockholders have spoken?
WE CALL ON THE DELL BOARD TO KEEP ITS PROMISE AND LET THE VOTE BE FINALLY DECIDED ON JULY 24. We think that – after six months- the time for soliciting is over. It’s time to vote. Do not move election day again. This is not a banana republic.
WHEN WILL WE HAVE AN ANNUAL MEETING?
WE ALSO CALL ON THE DELL BOARD TO MOVE QUICKLY TO HOLD THE DELL ANNUAL MEETING WHEN STOCKHOLDERS WILL BE ENTITLED TO ELECT OUR SLATE OF DIRECTORS IF THE MICHAEL DELL/SILVER LAKE TRANSACTION IS DEFEATED. Our slate has met and unanimously supports our proposed Dell self tender offer and its implementation in accordance with their fiduciary duties. As previously communicated, we believe that our proposed Dell self tender offer has a total value to tendering stockholders of approximately $15.50 to $18.00 per share.*
VOTE DOWN THE MICHAEL DELL/SILVER LAKE DEAL. VOTE IN OUR SLATE AT THE ANNUAL MEETING WHEN IT IS HELD.
We continue to urge stockholders to vote AGAINST the Michael Dell/Silver Lake transaction. We believe the future for Dell is bright and we hope that you agree.
Carl C. Icahn
Icahn Enterprises LP
O. Mason Hawkins, G. Staley Cates
Southeastern Asset Management