Carl Icahn Blasts Michael Dell’s Latest Buyout Offer With Twitter Poetry

Published on July 24, 2013
by Arik Hesseldahl

hader_dramaYesterday, it was references to Bob Dylan lyrics. Today, Carl Icahn, the activist investor seeking control of the computing company Dell, blasted the latest buyout offer from its founding CEO and board of directors with a short rhyme on Twitter:

He later followed up that tweet with another of his open letters to Dell shareholders, calling for the ouster of CEO Michael Dell and the company’s current board of directors.

The latest buyout offer from Michael Dell and Silver Lake values the company at $13.75 a share, or $24.6 billion. The offer is contingent on a change in the rules of the buyout process that counts non-votes as essentially equal to “no” votes on the proposed buyout. (See this earlier post for a detailed explanation.)

Icahn called that provision “the one thing protecting the interests of Dell stockholders,” and went on to say that “… To change the rules at the last minute is outrageous.” He repeated previous complaints about the $450 million breakup fee that he says Silver Lake would receive in the event the buyout doesn’t close, and called on the board to eliminate that provision. He also repeated a call for Dell’s board to convene its annual meeting of shareholders, and to hold a proxy vote that would include a slate of directors he has proposed to oversee the company.

His latest letter is below:

Dear Fellow Dell Stockholders and Special Committee:

In today’s latest installment of the “Desperate Dell Debacle,” Michael Dell/Silver Lake have asked the Company to change the rules of the game in a transparent attempt to force their freeze out transaction across the finish line despite the vote of its stockholders. In a Merger Agreement with widely-criticized protective devices in favor of Michael Dell/Silver Lake and a sales process that included a number of advantages for Michael Dell/Silver Lake, the one stockholder protection was the requirement that a majority of the non-Michael Dell shares approve the deal. The Special Committee has now been asked to GUT this provision to effectively render it meaningless. And, in return, Michael Dell/Silver Lake have offered to increase the deal price by $0.10, or 0.73%!

The Merger Agreement and the Proxy Statement established the rules. We and other stockholders have spent time and money understanding the rules created by Michael Dell, Silver Lake and Dell, and we have played by them. To change the rules at the last minute is outrageous. And, in this case, it appears the Special Committee may even agree with us, or at least they did back in February, when Dell, Michael Dell and Silver Lake ALL AGREED IN WRITING in the Merger Agreement that the required stockholder approvals “shall not be waivable.” SHALL NOT BE WAIVABLE. Perhaps that means something else to Michael Dell/Silver Lake and the Special Committee, but to us, it means what it says — You can’t get rid of this one provision that is designed to protect the interests of non-Michael Dell stockholders. Of course, this is precisely what Michael Dell and Silver Lake are today trying to do.

Michael Dell/Silver Lake this morning commented that the stockholder approval requirement is “unfair”. Are they serious? They’re complaining about the fairness of the Merger Agreement that they and their lawyers negotiated and agreed to! How is it fair to change the rules at the end of the game, particularly when they and their teams of lawyers established the rules? If they are so concerned about fairness, then let’s discuss and actually make the Merger Agreement fair — let’s get rid of the outrageous $450 million break up fee and change the definition of a Superior Proposal so it actually encourages competing bids. It’s outrageous to construct a merger agreement where a competing bidder does not get compensated with a break up fee if they are matched or topped. By not allowing this, it is virtually insurmountable to incentivize banks to finance a higher bidder.

We have spent the past 6 months explaining why we believe that not only does the Michael Dell/Silver Lake transaction undervalue the company, but it also freezes out loyal stockholders who deserve the opportunity to stay with Dell. How is that fair? In short, we have explained why we believe Michael Dell is doing a great disservice to his stockholders and has structured a deal that we believe is unfair. Today, Michael Dell and Silver Lake crossed the Rubicon by trying to take away the one provision in the Merger Agreement that actually provided stockholders with a voice in their company. It is time for Michael Dell and this Board to go. After more than a year since the last annual election, it is time to schedule the 2013 Annual Meeting and move forward.

A few days ago we warned this Board not to run the Company like a banana republic. Some commentators have even compared this “Desperate Dell Debacle” to Vladimir Putin and North Korea! After this latest action by Michael Dell/Silver Lake, we are clearer than ever — it is time for Michael Dell and this Board to go.

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