Icahn Claims Dell Board Is Using 'Shameless' Scare Tactics

On Monday Icahn, in an open letter to shareholders, accused Dell's board of using scare tactics to dissuade shareholders from backing his plan to gain control of Dell via a proxy fight.

Icahn said Dell's board is "shamelessly" attempting to scare shareholders by exaggerating the risks involved should he gain control of the company. Icahn accused the board of attempting "to frighten stockholders throughout this process" with "scary" facts."

Dell's board last week urged shareholders not to be "distracted from the clear choice they must make" and called Icahn's offer "highly speculative." The board warned shareholders that the company's stock would nosedive if they rejected the leveraged buyout plan to take the company private because of a "gap period" between Thursday's vote and a proxy battle at the end of the year at Dell's annual meeting.

[Related: Dell Exec Shuffle Forms Consolidated Global Channel Group ]

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Icahn said that this was "another blatant obfuscation of the facts," stating that the law requires a shareholder meeting by Aug. 14. "If the Michael Dell/Silver Lake proposal is voted down I believe that despite the scare tactics the annual meeting will be held very promptly," Icahn said.

Michael Gavaghen, vice president of sales and marketing at solution provider SLPowers, a Dell partner, said he is rooting for Michael Dell. "I have no idea what Carl Icahn plans to do with us, should he take over. I'd like to think he would be as channel-centric as his predecessor, but I have no evidence to support that. I have 10 years of evidence from the other guy," he said.

Wally Lang, general manager of Hipskind Technology Solutions Group, echoed the sentiments of other Dell channel partners interviewed about Thursday's shareholder vote. "If Dell stays publicly traded or goes private, so be it. I only care about high-quality equipment and fair channel practices," Lang said. Ultimately, he said he believes Michael Dell will win shareholder support for his bid to privatize the company.

Icahn is offering shareholders a $14-a-share buyback program and Friday sweetened the deal by offering warrants to investors that would allow them to buy more stock at a fixed priced. Icahn has said he wants to keep Dell public, oust Michael Dell from the board, and allow shareholders to benefit from higher share prices during any possible recovery.

Michael Dell is pushing for a $24.4 billion management-led buyout that would make the company private. This would allow him to focus on long-term growth and retooling the company away from commodity PC sales, he has said.

In his open letter, Icahn claimed investors are being misled: "They tell us about the profitable PC market drastically declining and point to their quarterly numbers. But they neglect to point out the reduction in margin is of their own doing because they have, of their own volition, lowered prices, which obviously have drastically reduced margins. But even Dell's own management believes this is temporary."