Michael Dell Faces Bruising Fight With Icahn, Southeastern for Company
In the letter, Icahn and Southeastern had harsh words for both the board and Michael Dell. They criticized the board for not only agreeing to the CEO's bid, but also agreeing to pay him hundreds of millions of dollars should the deal not go through. They said they didn't understand why, when Michael Dell and Silver Lake approached them with the offer, the directors wouldn't give shareholders the option of accepting it or give them another alternative—like theirs—that gave investors money and enabled them to continue profiting if the company prospered. "After all, many loyal shareholders held on while management and the Board oversaw the decline of the company these many years," Icahn and Southeastern wrote. "Instead, astonishingly, we believe the Board basically said 'thank you Michael for offering to purchase the company with the shareholders' own money at a bargain price and, by the way, if anyone dares to offer a higher value like our proposal and you don't want to compete with it, have no fear because we will award you a break-up fee of up to $450 million. And even if we find the competing offer to be a "superior offer," we will still pay you at least $180 million.'" They also said they saw a lot of potential for Dell and its transformation efforts. There also are opportunities to pare away "excessive and bloated overhead" and the possibilities of spinning off business units that no longer are part of Dell's core efforts. "Most importantly, we note Dell is not solely a cost story," they wrote. "Dell is a proud 29-year-old global brand with key relationships with some of the world's most dynamic suppliers (including Microsoft and Intel which have a vested interest in Dell's success), enterprises (small, medium and large), and individual loyal customers. We truly believe the best days for Dell are yet to come and the company has a tremendous opportunity to build on its strong platform.""You need a new CEO," Icahn told CNBC. "You'd need to change the culture. … If our board's elected, he's not going to be running the company. That, I can guarantee 100 percent."
However, if Icahn and Southeastern have their way, those best days will be without Michael Dell.