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Icahn ends battle for control of Dell; vote due on Thursday

Dell logos are seen at its headquarters in Cyberjaya, outside Kuala Lumpur September 4, 2013. REUTERS/Bazuki Muhammad
Dell logos are seen at its headquarters in Cyberjaya, outside Kuala Lumpur September 4, 2013. REUTERS/Bazuki Muhammad

By Nicola Leske and Poornima Gupta

(Reuters) - Carl Icahn on Monday ended his months-long effort to block Michael Dell's $25 billion offer to take Dell Inc private, smoothing the way for the largest buyout since the financial crisis.

The activist investor, the company's second-largest shareholder, said he would no longer try to head off the deal, and that a war with the billionaire founder and the company's board "would be almost impossible to win."

His withdrawal significantly improved the odds that the company would finally muster enough votes at a special shareholders' meeting slated for Thursday to clinch the deal. But Icahn, known for aggressive tactics when going after corporations, could not resist a parting shot.

"The Dell board, like so many boards in this country, reminds me of Clark Gable's last words in "Gone with the Wind," they simply 'don't give a damn,'" Icahn wrote in a letter to shareholders on Monday.

Dell declined to comment.

Icahn's move ended a battle that has raged since March, pitting Michael Dell and private equity firm Silver Lake Partners against Icahn and money manager Southeastern Asset Management.

The founder has sought to take the company private to transform it - away from public scrutiny - into a provider of enterprise computing services, from a maker of personal computers. Icahn argued that Michael Dell's offer undervalued the company's shares.

Icahn's capitulation follows a number of setbacks to his opposition campaign.

In August, a judge refused to fast-track a lawsuit Icahn filed against the company, blunting an integral part of his opposition campaign. Icahn sought the court's help in forcing Dell to hold its annual meeting at the same time it convened a special vote on the deal, thereby giving him a chance to propose a slate of directors to replace the current board.

Icahn had wanted to nominate a slate of directors to replace several board members, arguing that they were not acting in shareholders' best interests in accepting the CEO's deal.

LITANY OF SETBACKS

Also, the company's board changed voting rules after Michael Dell raised his offer in July, and will ignore shareholder abstentions. Previously, abstentions were counted as "no" votes.

Icahn also cited a change in the record date for stockholders to determine eligibility to vote on the proposed takeover, a significant change that allows shareholders that bought their stock recently - such as arbitrage funds eager to see the deal go through - to have their say.

Later, Icahn argued during an interview with CNBC that his involvement meant the shareholders got additional value for their shares, forcing Michael Dell and Silver Lake to raise their offer.

"We did the work for the board," he said. "The board just sat back."

Icahn also revealed that he had been close to picking a CEO candidate but the person, whom he did not name, backed out at the last minute.

The meeting to vote on Michael Dell's offer had been postponed three times as he and Silver Lake struggled to round up the needed votes or convince "no" votes to support the deal.

While he would not pursue additional efforts to block the deal, Icahn said he still opposed it and would move to seek appraisal rights, according to the letter that he filed with regulators.

The company's shares ended trading on Monday unchanged, at $13.84.

(Reporting by Poornima Gupta, Sinead Carew and Nicola Leske; Editing by Bernadette Baum and Steve Orlofsky)

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