Icahn Bows Out of Battle for Control of Dell

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CNBC EVENTS -- Delivering Alpha -- Pictured: CNBC Institutional Invester Delivering Alpha conference keynote speaker Carl Icahn, Chairman, Icahn Enterprises, and CNBC's Scott Wapner on July 17, 2013 in New York. -- (Photo by: Heidi Gutman/CNBC/NBCU Photo Bank via Getty Images)
Heidi Gutman, CNBC/NBCU Photo Bank via Getty ImagesActivist investor Carl Icahn
By TOM MURPHY

Billionaire investor Carl Icahn is giving up his bitter takeover fight for Dell a few days before shareholders are scheduled to consider the latest buyout offer from the struggling computer maker's founder, Michael Dell.

Icahn said Monday in a letter to shareholders that he still thinks Michael Dell's bid to take his company private undervalues the business and freezes shareholders out of any future gains. But Icahn also said it would be "almost impossible" to defeat that offer in a vote scheduled for Thursday.

Icahn and another major Dell shareholder, Southeastern Asset Management, said they won't pursue additional efforts to defeat it.

"We therefore congratulate Michael Dell and I intend to call him to wish him good luck [he may need it]," Icahn wrote in the letter.

Michael Dell's $24.8 billion bid to take his company private includes an offer of $13.75 a share plus a 13-cent dividend. Dell raised that bid last month after previous offers also drew strong criticism from Icahn and other major Dell Inc. (DELL) investors.

Dell's shares have plunged by more than 40 percent since Michael Dell returned for a second stint as CEO in 2007, largely because the company has had trouble adapting to a technological shift that has caused PC sales to fall as more people use smartphones and tablets.

The company said last month that its fiscal second-quarter earnings fell 72 percent, in part because of price-cutting aimed at slowing a sales decline.


Michael Dell wants to take his company private because he foresees the business going through a painful transition that will likely hurt earnings, something that will be easier to endure without Wall Street's fixation on short-term results.

But Icahn has said the buyout would keep stockholders from sharing the gains the company will reap from a business turnaround. His announcement Monday comes more than a month after he vowed to keep fighting Michael Dell's takeover and said "the war regarding Dell is far from over."

Icahn wanted to oust Dell's board and pursue a complex alternative to Michael Dell's bid that Icahn has said would be worth at least $15.50 a share.

But the investor said Monday that a Delaware court ruling and a higher bid from Michael Dell and Silver Lake Partners - they had raised the price from $13.65 a share and added the dividend - hurt his chances in Thursday's vote.

Icahn wanted the vote on Michael Dell's offer and the company's annual meeting to be scheduled the same day so he could oust the board. But he noted in his shareholder letter that a Delaware judge ruled that the gap between Thursday's vote and the annual meeting set for next month was legal.

Dell shares rose 1 cent to $13.85 Monday morning while the Nasdaq exchange also climbed less than 1 percent.



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