NEW YORK and MEMPHIS, Tenn., July
29, 2013 /PRNewswire/ -- Carl C.
Icahn and his affiliates and Southeastern Asset Management,
Inc. today issued the following open letter to the Dell Inc.
(NASDAQ: DELL) Special Committee.
Ladies and Gentlemen:
Michael Dell/Silver Lake's
recent demand that the Special Committee change the voting method
for "Unaffiliated Stockholder Approval" for the proposed Michael
Dell/Silver Lake freeze-out merger
raises serious questions for the Special Committee. As you
know, $ billions in market value of Dell shares have traded since
the terms of the Merger Agreement first became public. That's
more than the aggregate market value of many (if not most) public
companies. All of those trades assumed that the vote
requirement to approve the transaction was as recited and
non-waivable in the Merger Agreement. Is it really OK to
change a material fact on which those buyers and sellers relied for
a token increase in merger consideration? Is there any price
at which this can be done properly? We think not.
We continue to oppose the change of the standard for
"Unaffiliated Stockholder Approval," which we view as one of the
most important and maybe the only safeguard for stockholders
included in the Merger Agreement. Dell, Michael Dell and
Silver Lake all agreed in writing
in the Merger Agreement that the required method of stockholder
approval was so important that it could not be waived. But,
today, Michael Dell and Silver
Lake are offering you a dime to waive this critical
protection for stockholders in the Merger Agreement. Also, to
our amazement, some have suggested that you might agree to do that
"for the right price." However, in our view, the very
protection that Michael Dell and Silver
Lake would have you forego is too important to waive at
virtually any price.
As we understand it, Michael Dell and Silver Lake would have you believe that it is
somehow unfair to require an affirmative vote on their
self-interested transaction by owners of a majority of the
unaffiliated shares. However, based on the votes cast to
date, this appears to be a transaction where the protection
afforded by this provision is most needed.
For example, widespread media coverage of the vote indicates
that, in contrast to many public company mergers, the overall
"for"/"not for" ratio of the votes cast to date on the Michael
Dell/Silver Lake freeze out
transaction is roughly 50/50. However, after giving effect to
non-votes (including shares that have not been voted in reliance
upon Dell's assurances that a non-vote would have the same effect
as a vote against the merger), the ratio of votes cast to-date is
closer to only 40% for the transaction and 60% against the
transaction.
Also, contrary to what Michael Dell has told the Wall Street
Journal, the turnout at the special meeting now scheduled for
August 2 is not "unusually low" and,
based on Dell's recent prior experience with stockholder meetings,
should not have been "unexpected." According to Dell's
own filings with the Securities and Exchange Commission, the
quorums at Dell's 2012, 2011 and 2010 annual meetings of
stockholders were 73.8%, 75.2% and 76.8%, respectively, with about
69.0%, 71.0% and 73.4%, respectively, of the shares owned by the
unaffiliated stockholders voting at those meetings (assuming that
Michael Dell voted the shares he controlled, directly and
indirectly, at those meetings). As of Friday, July 26, based on the voting returns
received to date, the anticipated quorum for the special meeting to
be reconvened on August 2 and the
vote participation level for the unaffiliated stockholders already
exceed the levels achieved at Dell's 2012, 2011 and 2010 annual
meetings of stockholders.
As we see it, Michael Dell and Silver
Lake agreed to a specific voting requirement to approve
their deal with full knowledge of the vote participation levels in
previous years. Despite two opportunities, following
approximately six weeks of soliciting proxies and approximately six
months of promoting their deal, they have been unable to achieve
the required stockholder approval and have now offered to pay a
dime for a new method of voting designed to prevent stockholders
from passively dissenting on the proposed merger. We view
this as a cynical attempt to circumvent the process, which we are
told was full of steps designed to protect the interests of Dell
stockholders, including this key voting requirement. Based
upon their prior success in securing advantageous terms from the
Special Committee, we don't blame Michael Dell or Silver Lake for trying or even thinking that
this, too, might be acceptable to the Special Committee.
However, we believe that even you won't be fooled by what has been
proposed.
The plain and simple fact is that Michael Dell and Silver Lake have underestimated the extent of
stockholder opposition to the Michael Dell/Silver Lake transaction and are unwilling to
pay fair value to obtain approval of their interested-party
freeze-out transaction. We believe that many Dell
stockholders that currently oppose the transaction may have simply
not voted because they knew that their inaction would count as a
vote against the merger and that the Unaffiliated Stockholder
Approval condition could not be waived. Should these voters
be disenfranchised due to a change in rules? In a management
led buyout where the CEO seeks to take control of the company,
shouldn't the burden be on the Company to get the necessary
affirmative votes?
The reaction of Dell's owners to the Michael Dell/Silver Lake freeze-out transaction was, in our
opinion, foreseeable. It is not something the board of Dell
should seek to "remedy" by altering the rules for stockholder
approval. We trust that you will see this for what it is and
recognize that proper protections for stockholders of Dell should
not be offered for sale to anyone at any price.
Finally, we do not believe you should agree to change the record
date for determining stockholders entitled to vote on the Michael
Dell/Silver Lake transaction in
the hope of providing Michael Dell and Silver Lake with a more transaction-friendly
voting base. In fact, we strongly believe that you should
stop postponing the vote on that transaction and allow the vote to
proceed toward its proper conclusion on August 2 – the 60th calendar day
following the June 3 record date.
As you know, we also believe that a new board should be elected
at Dell, and we have proposed a slate of directors. The
current Dell board members have already been in office past their
one-year terms. Decisions as important as those facing the
Special Committee should not be made by directors that have already
served past their one-year terms.
If Dell wants to continue to delay the vote on the Michael
Dell/Silver Lake freeze-out
merger, then Dell should hold the Annual Meeting of stockholders at
the same time as the vote on the merger. In that way, Dell
stockholders would be given the choice to support the Michael
Dell/Silver Lake transaction, or
to instead vote for our slate of directors who support our
previously announced Dell $14 (plus
warrants) self tender offer.1
We urge the Special Committee not to ignore their contractual
commitment and not change the Unaffiliated Stockholder
Approval. We believe that the existing Unaffiliated
Stockholder Approval was appropriately included in the original
Merger Agreement, which was agreed to by Dell, Michael Dell and
Silver Lake as a non-waivable term
of that agreement. The Special Committee should maintain the
Unaffiliated Stockholder Approval standard it agreed it would not
waive and should call an Annual Meeting for the election of
directors.
Sincerely,
Carl C.
Icahn
|
O. Mason Hawkins,
CFA
|
G. Staley Cates,
CFA
|
Icahn Enterprises
LP
|
Southeastern
|
Southeastern
|
|
Asset Management,
Inc.
|
Asset Management,
Inc.
|
1) Our proposed Dell self tender
transaction is contingent upon the proposed take-private
transaction being defeated, the election of a new Dell Board of Directors, and approval by that
new Board.
NOTICE TO INVESTORS
SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT, DATED
JUNE 26, 2013, AND OTHER DOCUMENTS
RELATED TO THE SOLICITATION OF PROXIES BY ICAHN ENTERPRISES, LP,
SOUTHEASTERN ASSET MANAGEMENT, INC. AND THEIR RESPECTIVE AFFILIATES
FROM THE STOCKHOLDERS OF DELL INC. FOR USE AT DELL INC.'S SPECIAL
MEETING OF STOCKHOLDERS NOW SCHEDULED TO BE HELD ON AUGUST 2, 2013 BECAUSE THEY CONTAIN IMPORTANT
INFORMATION, INCLUDING INFORMATION RELATING TO THE PARTICIPANTS IN
SUCH PROXY SOLICITATION. A DEFINITIVE PROXY STATEMENT AND A
FORM OF PROXY HAVE BEEN MAILED TO STOCKHOLDERS OF DELL INC. AND ARE
ALSO AVAILABLE AT NO CHARGE AT THE SECURITIES AND EXCHANGE
COMMISSION'S WEBSITE AT HTTP://WWW.SEC.GOV. INFORMATION RELATING TO
THE PARTICIPANTS IN SUCH PROXY SOLICITATION IS CONTAINED IN THE
DEFINITIVE PROXY STATEMENT, DATED JUNE 26,
2013. EXCEPT AS OTHERWISE DISCLOSED IN THE DEFINITIVE PROXY
STATEMENT, THE PARTICIPANTS HAVE NO INTEREST IN DELL INC. OTHER
THAN THROUGH THE BENEFICIAL OWNERSHIP OF SHARES OF COMMON STOCK OF
DELL INC. AS DISCLOSED IN THE DEFINITIVE PROXY STATEMENT. WE
HAVE NOT SOUGHT, NOR HAVE WE RECEIVED, PERMISSION FROM ANY THIRD
PARTY TO INCLUDE THEIR INFORMATION IN THIS LETTER.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this letter, and the documents
referred to in this letter, are forward-looking statements
including, but not limited to, statements that are predications of
or indicate future events, trends, plans or objectives. Undue
reliance should not be placed on such statements because, by their
nature, they are subject to known and unknown risks and
uncertainties. Forward-looking statements are not guarantees
of future performance or activities and are subject to many risks
and uncertainties. Due to such risks and uncertainties,
actual events or results or actual performance may differ
materially from those reflected or contemplated in such
forward-looking statements. Forward-looking statements can be
identified by the use of the future tense or other forward-looking
words such as "believe," "expect," "anticipate," "intend,"
"plan," "estimate," "should," "may," "will," "objective,"
"projection," "forecast," "management believes," "continue,"
"strategy," "position" or the negative of those terms or other
variations of them or by comparable terminology.
Important factors that could cause actual results to differ
materially from the expectations set forth in this letter include,
among other things, the factors identified under the section
entitled "Risk Factors" in Dell's Annual Report on Form 10-K for
the year ended February 1, 2013 and
under the section entitled "Cautionary Statement Concerning
Forward-Looking Information" in Dell's Definitive Proxy Statement
filed with the SEC on May 31, 2013.
Such forward-looking statements should therefore be construed
in light of such factors, and Icahn and Southeastern are under no
obligation, and expressly disclaim any intention or obligation, to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
required by law.
Contact:
Icahn Enterprises
Susan Gordon
(212) 702-4309
Southeastern Asset Management
Lee Harper
(901) 818-5240
SOURCE Southeastern Asset Management