In a new letter to shareholders, Icahn foremost renews his argument that the computer company is deliberately sabotaging itself, to create the appearance that the business is deteriorating in a way that would make investors more likely to take the easy route out and accept the $24.4 billion, $13.65 a share, management-led buyout. At the same time, Icahn is offering a $14-a-share buyback program, along with a warrant that would allow investors who stick around to buy more shares (once the stock goes higher).
Another issue that Icahn addressed is the idea that his leveraged recap would take too long. A prominent proxy adviser firm last week choose the management buyout, in which Dell would sell itself to its billionaire founder Michael Dell and private equity shop Silver Lake Partners, rather than Icahn's idea primarily because it fears the leveraged recap would prolong the comeback that Dell needs. Dell is struggling to compete in a tech world characterized more by
If Icahn's plan worked, shareholders would scuttle this week's vote on the management buyout, and then Icahn would need them to vote for his slate of directors at the upcoming annual meeting. Dell directors say the period between the buyout vote and the meeting is too protracted and risks further decline at Dell. Icahn has examined the proxy, and finds that the board must call an annual meeting by Aug. 14, meaning the gap between the vote and the meeting is considerably shorter than investors might think.
As for whether his proposed directors might lose, Icahn says, "This is nonsense because it makes no sense to believe stockholders will vote to elect the current board with their abysmal record and turn down our recap offer."
Ultimately, the battle between Icahn and Dell will come to an end this week, a conclusion to one of the more bruising, and entertaining, war of words waged recently in corporate America.
Reach Abram Brown at abrown@forbes.com.
