Carl Icahn gives up fight for control of Dell

Founder’s plan nears vote

Michael Dell aims to take the company he found private. If shareholders approve, the company expects the deal to close later in its third quarter, which ends next month.

Paul Sakuma/Associated Press/File 2007

Michael Dell aims to take the company he found private. If shareholders approve, the company expects the deal to close later in its third quarter, which ends next month.

NEW YORK — Carl Icahn is giving up his bitter takeover fight for Dell Inc., 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 the 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, won’t try 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.

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Michael Dell’s $24.8 billion bid includes an offer of $13.75 per share plus a 13 cent dividend. He raised that bid last month after previous offers drew strong criticism from Icahn and other 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.

Fiscal second-quarter earnings fell 72 percent, in part because of price-cutting aimed at slowing a sales decline.


Michael Dell wants to take the company private and diversify. He foresees the business going through a painful transition that will probably hurt earnings, something that will be easier to endure without Wall Street’s fixation on short-term results.

Icahn has said the buyout would keep stockholders from sharing gains the company will reap from an eventual turnaround. 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 per share. He has said that if his board candidates were elected, he could guarantee Michael Dell would no longer be CEO.

Ultimately, though, Icahn told fellow investors that a Delaware court ruling and the higher bid from Michael Dell and Silver Lake Partners — they had raised the offer from $13.65 per share and added the dividend — hurt his chances in Thursday’s vote.

The vote on Michael Dell’s buyout offer had been delayed a few times as his group tried to rally support. That prompted Icahn to compare the company to a dictatorship.

‘‘We jokingly ask, ‘What’s the difference between Dell and a dictatorship?’’ he said in his shareholder letter. ‘‘The answer: Most functioning dictatorships only need to postpone the vote once to win.’’

Dell spokesman David Frink declined to comment on Icahn’s letter.

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