NEW YORK – Carl Icahn, the activist investor who has fought with Michael Dell for the control of the Dell Computer (NASDAQ:DELL), announced over the weekend that he is walking away from his attempts to secure a higher price for his 8.9 percent stake in the company. While Icahn, will walk away from his battle for Dell, he did leave a parting shot, saying that the $ 24.9 billion buyout offer ‘greatly undervalues’ the company.
In a Twitter post on Saturday, Icahn announced he was dropping his demand for a Delaware Court to appraise his shares. Under Delaware law, shareholders of Delaware corporations can ask the Chancery Court to conduct an independent valuation of fair value in a takeover.
Icahn had vowed to purse the legal battle; however, this weekend’s reversal illustrates how Icahn’s ‘activism’ is often used to generate short-term gains. According to Gary Lutin, a former investment banker who is setting up a trust for investors who seek Dell appraisal rights, ‘this is what Icahn has always been good at, yelling and shaking and grabbing what he can.’
Abandoning the appraisal request clears the way for Icahn to pocket more than $ 2 billion under the terms of the buyout. In his Twitter post, Icahn added ‘I withdrew my demand for appraisal of my Dell shares, based on our returns on capital; we believe we have better uses for $2 billion.’
However, the appraisal battle is not over as investors holding more than 68.5 million shares of Dell stock passed up the $942 million they would have received through the buyout to pursue a court valuation for their stock holdings. As such, Icahn’s announcement has left many of these investors, mostly small investors, out to hang and it is expected that many will follow Icahn’s lead and accept Dell’s offer.
In other news, Dell released an updated line of tablet computers featuring Microsoft’s (NASDAQ:MSFT) Windows 8 Operating System and Google’s (NASDAQ:GOOG) Android operating system over the weekend. In particular, the Windows 8.1 versions included the ability to integrate with existing corporate software including Microsoft Exchange and SharePoint. As such, this follows earlier comments from Michael Dell that the company will focus on enhancing enterprise solutions, increasing the company’s sales capacity, shifting to emerging markets, virtual computing in tablets and PCs, and ‘investments to enhance the customer experience.’