The smoke clears in Dell battle

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11 September 2013

Just like that, Carl Icahn has called time on his audacious bid to take over Dell. He’s jacked it in, given up, packed up his tent and gone home. Icahn is now Icahn’t.

In his letter to Dell shareholders conceding defeat, Icahn said the company was being sold for a price “approximately 70% below its ten-year high of $42.38” and claimed the bid “freezes stockholders out of any possibility of realising Dell’s great potential”.

He also launched a broadside against the tactics employed by the company’s board to, as he saw it, tilt the balance in favour of Michael Dell and Silver Lake Partners, writing: “We jokingly ask, ‘What’s the difference between Dell and a dictatorship?’ The answer: Most functioning dictatorships only need to postpone the vote once to win.”

Putting a brave face on his defeat, Icahn claimed his bid had forced Michael Dell and Silver Lake to increase their best and final offer. “As a result of this increase all stockholders are to receive many hundreds of millions of dollars more than the board originally accepted,” he added.

Icahn’s withdrawal from the battle to gain control of Dell leaves the way clear for Michael Dell to take the company private and pursue a turnaround strategy designed to make it more competitive and profitable. That’s the theory in any case.

While there’s nothing intrinsically wrong with giving Dell more control of the company that bears his name to try and regain the glory days, there’s nothing to say it will succeed either. Dell hasn’t exactly covered himself in glory since he returned to take back the reins of the company in 2010 and there’s no guarantee he’ll manage it once the buyout is complete.

Back in July, I argued the battle for control of Dell was “like a fight between two one-eyed men for a pair of spectacles that has only one lens still intact -and it’s in the wrong eye”. Now that Icahn has gone, Michael Dell has the unenviable honour of trying to use them to see his way to future success.

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