Carl Icahn Withdraws His Appraisal Request for Dell Stake
By Miles Weiss - Oct 4, 2013 4:16 PM ET
Carl Icahn walked away from his effort to win a higher price for an
8.9 percent stake in
Dell Inc. (DELL) less than a month after stating that the $24.9
billion buyout “greatly undervalues” the computer maker.
a post today on Twitter, Icahn said he was dropping his demand for an
independent court appraisal of his 156.5 million Dell shares. Under the
Delaware, where Dell is incorporated, stockholders can ask the state
chancery court for an independent valuation of fair value in a takeover.
The billionaire, in a Sept. 9 letter to other Dell
shareholders, vowed to pursue appraisal rights even as he conceded
defeat after a months-long effort to spur a higher bid or win control of
the Round Rock, Texas, company. Today’s reversal shows how Icahn’s
shareholder activism is often designed to generate short-term gains, said
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,” said Lutin, who runs the
Shareholder Forum, the New York-based sponsor of the Dell Valuation Trust.
“Yelling and shaking and grabbing what he can.”
Icahn, who didn’t return a telephone call seeking comment, said in the
September letter that his efforts had forced
Michael Dell and partner Silver Lake Management LLC to boost their bid
to $13.75 a share, plus a 13 cent dividend, from the $13.65 a share they
originally offered in February. Abandoning the appraisal demand clears the
way for Icahn to collect the $2.2 billion he is entitled to receive under
the buyout’s revised terms.
withdrew my demand for appraisal of my Dell shares,” Icahn said in his
Twitter post. “Based on our returns on capital, we believe we have better
uses for $2 billion.”
pursue a claim under Delaware law, an investor needs to file an appraisal
demand with the target before the shareholder vote, then oppose the deal
or refrain from casting a ballot. Once the deal closes, investors who have
filed demands have 60 days to change their minds and accept the price
being paid in the buyout. Dell shareholders approved the buyout on Sept.
12, and the company has said it expects to complete the transaction by
Dell received appraisal requests for 225 million shares, including
Icahn’s, said a person familiar with the matter, who asked not to be
identified because the information hasn’t been made public. That suggests
investors holding an additional 68.5 million Dell shares passed up the
$942 million they would have received through the buyout to pursue a court
valuation for their stock holdings.
The investors must file a petition with the Delaware Chancery Court
seeking an appraisal within 120 days after the deal becomes final. Absent
a settlement, they would receive whatever the court decides Dell shares
were worth when the buyout was completed, plus interest of almost 6
Dell filed a Form 8-K with the U.S. Securities and Exchange Commission
today saying that Icahn notified the company yesterday that his affiliates
withdrew their appraisal demands.
“We are going to proceed accordingly with the rest of the process,
including closing” the buyout later this month “and then with whatever
litigation occurs down the road,”
David Frink, a Dell spokesman, said today in an interview.
contact the reporter on this story: Miles Weiss in Washington at
contact the editor responsible for this story: Christian Baumgaertel at
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