Silver Lake and Microsoft-backed Dell bid gets a boost as Icahn raises white flag
Tuesday, September 10, 2013/
Colourful investor Carl Icahn has ended a months-long effort to block a $US25 billion bid to take computer giant Dell private, backed by Silver Lake Partners, Microsoft and founder Michael Dell.
According to Reuters, Icahn acknowledges it would now be almost impossible to block the deal ahead of a special shareholders’ meeting set for Thursday.
“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.
In January, news first surfaced of the Microsoft-backed bid to take the company private, with the Silver Lake consortium offering shareholders $US24.4 billion, or $US13.65 per share, in exchange for taking the company private.
A counter-offer from Icahn soon emerged with a leveraged recapitalisation plan.
Under Icahn’s proposal, shareholders in Dell would have received a once-off dividend of $US12 per share, with the company borrowing to fund the $US21 billion payment and shareholders retaining their shares in the company.
However, the bidding war came at a difficult time for the company. As SmartCompany recently reported, according to figures compiled by Gartner, Dell’s sales dropped 3.9% from 9.34 million to 8.98 million during the second quarter of 2013.
Meanwhile, the company’s net income for the quarter collapsed by 72%, from $US732 million to just $US272 million.
The drop led to a 71% fall in earnings per share, down from US42 cents to just US12 cents per share.
The drop was led by a massive 71% year-on-year drop in operating income at its End User Computing segment, which sells desktops computers, tablets and other consumer devices, to $US205 million.