After a long battle, Carl Icahn and associates admitted they were fighting a losing battle and have stepped away from their attempt to buy Dell.
Icahn's withdrawal leaves only a buyout offer from company CEO Michael Dell and associate Silver Lake Partners on the table, who have proposed a deal in which shareholders will get US$13.75 per share and a special dividend of $0.13. Dell's board has recommended shareholders back the Dell/Silver Lake offer and a final shareholder approval vote is set for Thursday.
Icahn and shareholder Southeastern Asset Management had a buyout proposal that they believed was potentially worth $15.50 to $18 a share for current stockholders. In a withdrawal letter to Dell shareholders Monday, Icahn said he was fighting a losing battle and continued to believe the company was being undervalued.
"We therefore congratulate Michael Dell and I intend to call him to wish him good luck (he may need it)," Icahn wrote.
Dell and Silver Lake originally in February proposed to buy the company for $24.4 billion, or $13.65 per share, but the offer was revised twice after shareholder opposition and multiple counteroffers from Icahn. Dell's board delayed the shareholder vote twice, but last month reached a deal with Dell/Silver Lake on revised voting guidelines in which only "yes" or "no" votes would count, with abstentions left out.
Icahn filed a lawsuit in early August with the Court of Chancery of the State of Delaware against Dell's board of directors on shareholder vote delays and requirements of votes considered. However, the court ruled against Icahn, which cleared the path for the final shareholder vote this week.
"We won, or at least thought we won, but when the board realized that they lost the vote, they simply ignored the outcome. Even in a dictatorship when the ruling party loses an election, and then ignores its outcome, it attempts to provide a plausible reason to justify their actions," Icahn wrote.
Dell's business largely revolves around the deteriorating PC business. The company is trying to increase its presence in the lucrative enterprise market. The company has virtually no presence in the growing smartphone and tablet markets.