Carl Icahn won’t get the last tweet on Dell. The uppity billionaire has conceded defeat in his effort to block Michael Dell’s $24 billion buyout of the eponymous PC maker. Icahn’s logic never computed. His recent Apple punt is a stronger advertisement for his self-promotional parting shot to Dell shareholders.
The alternative future for Dell, as sketched out by Icahn and Southeastern Asset Management, would have added debt to pay a dividend and left a stub of equity. These shares would then have benefited from a corporate turnaround, or so the argument went, eventually leaving shareholders better off than under the agreed buyout with Michael Dell and Silver Lake Partners.
The original offer in February provided a 25 percent premium, and with Dell’s core PC business in steep decline the price looked increasingly generous as time passed. Icahn argues in a valedictory letter on Monday that the buyout undervalues Dell because the price is about 70 percent below the company’s 10-year high of $42.38. The comparison is absurd, especially in such a fast-changing industry.
Although Icahn legitimately quibbles with a process that eventually squeezed an extra 2 percent from the buyers in return for delaying and altering the shareholder vote, overall Dell’s board does seem to have tried hard to solicit serious alternative bids. Those efforts came to nothing, another sign the Icahn-Southeastern camp was over-egging its rationale for a higher valuation.
Icahn’s long-term investing record is strong, and so he can be forgiven the occasional misstep. He may walk away with a slim profit on the Dell investment anyway. If, however, Icahn wants to champion himself – as he did by writing, “If you are incensed by the actions of the Dell Board as much as I am, I hope you will choose to follow me on Twitter where from time to time I give my investment insights” – he has better material.
When he tweeted on Aug. 13 that he had bought shares in Apple, the iPad maker’s market value increased by almost 5 percent, or some $20 billion. The company’s shares have since gained another 3 percent, for a combined total that surpasses the entire value of Dell. That’s a good reason to follow someone on Twitter.