It Ain't Over Yet: Icahn, Southeastern Demand That Dell Give Shareholders A Choice


Icahn and Cates also said Dell should have offered shareholders "an obvious alternative" to sell shares or allow them to continue to profit if the company prospered.

"After all, many loyal shareholders held on while management and the board oversaw the decline of the company these many years. Instead, astonishingly, we believe the Board basically said, 'Thank you Michael for offering to purchase the company with the shareholders' own money at a bargain price and, by the way, if anyone dares to offer a higher value like our proposal and you don't want to compete with it, have no fear because we will award you a break-up fee of up to $450 million. And even if we find the competing offer to be a 'superior offer', we will still pay you at least $180 million," the letter continued.

"This company has suffered long enough from very wrong-headed decisions made by the board and its management. Do not make another by putting the company through an unnecessary debilitating proxy fight. Allow the shareholders to decide for themselves which offer they choose," Icahn and Cates wrote.

Dell has maintained that the go-private deal would be used to invest in enterprise technology to help transform the company away from lower-margin PC business.

Icahn and Cates wrote, "We believe Dell can make the needed transition from an elite maker of computers to a global provider of services to enterprises and thrive as a public company. Dell just needs the right management team in place to execute on the opportunity we have laid out, a team that is incentivized to work for all shareholders and not just themselves -- a team that we believe a new board, operating outside of the constraints of this hostile situation, could certainly assemble."

The letter concluded, "We continue to believe, as apparently does Michael Dell and his partner Silver Lake, that the future of Dell is bright. We see no reason that the future value of Dell should not accrue to ALL the existing Dell shareholders -- not just Michael Dell.

"If the going private transaction turns out to be a home run for Michael Dell in the coming years, which we expect will in fact occur, it may well be attributed to an error by the Dell board. This is the litigation risk that you now face. Either give shareholders the real choice they are entitled to or face the legal liability for your failures.

"You now have the opportunity to ameliorate the damage that we believe you have caused to Dell and its shareholders by following the fair and reasonable path set forth in this letter. It is not too late to do the right thing and thereby answer the ongoing criticism and legal attacks that the going private transaction has attracted."

PUBLISHED MAY 10, 2013