Carl Icahn Monday gave up efforts to avert the near $24.9 billion buyout of computer maker Dell Inc. (DELL) by its founder Michael Dell and private equity firm Silver Lake.
In a letter to Dell shareholders, the activist investor said that while he thinks the offer to be undervalued and against shareholders' interests, it is just impossible to defeat the deal in a vote set for Thursday.
Icahn's abandonment of months-long effort to thwart the deal comes after Michael Dell and Silver Lake repeatedly boosted the offer price and added a special dividend. Michael Dell also succeeded in amending the voting rules to smoothen the buyout.
Dell, based in Round Rock, Texas, in February agreed to be taken private for $13.65 per share by Michael Dell and Silver Lake in a $24.4 billion deal. In July, the offer was raised by another ten cents to $13.75 per share in cash, lifting the original offer price by $150 million.
But the deal has all along found stiff resistance from stakeholders like Carl Icahn and Southeastern Asset Management. Icahn, with an 8.9 percent stake in Dell, felt the offer price to be undervalued and wanted to rejig the Dell board.
Last Month, Michael Dell came out with an improved offer and additional special dividend in return for an amendment in the voting rules. That increased the offer by about $470 million to about $24.9 billion.
Dell, once a darling of Wall Street and the world's largest PC maker, was among the worst-hit tech giants during the recession. In recent times, Dell has been grappling with lower sales as consumers shift their preference to Apple Inc.'s (AAPL) iPad and smartphones.
Last month, Dell said its quarterly profit plunged 72 percent, with almost flat revenue and poor margins. Dell is the world's third largest maker of server computers behind International Business Machines Corp. (IBM) and HP.
Michael Dell feels taking the company private, while being a painful process, will nonetheless free Dell from the short-term fixations of Wall Street, and prepare the computer maker for the long haul, with focus on hardware, software and services.
Meanwhile, a Delaware court is to hear the case filed by Carl Icahn over the deal. Icahn plans to seek a court appraisal of the value of Dell.
Dell shares are trading at $13.85, up $0.01 or 0.07%, on a volume of 14.3 million shares on the Nasdaq.
by RTT Staff Writer
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