2014

Carl C. Icahn Issues Open Letter To Stockholders Of Dell: No-Brainer At Dell

NEW YORK, July 11, 2013 /PRNewswire/ -- Carl C. Icahn and his affiliates today issued the following open letter to stockholders of Dell Inc.

Dear Fellow Dell Stockholders:

On rare occasions in investing, one comes across situations that are "no-brainers."  In these situations the odds are greatly in your favor of making a profit while taking very little risk, and in some very rare situations, you can make a profit while taking no risk at all.  Strangely, in my experience many investors miss the opportunity to take advantage of these situations.

When I first started Icahn & Co. in 1968 I discovered that you could purchase convertible bonds in companies and sell short the stock they converted into.  If the market declined precipitously, the stocks you shorted would go down but the bonds would stop declining and trade as bonds.  Few investors set up this riskless arbitrage because no one thought the market would go down enough to make a profit on the bonds.  But the market crashed in 1969, and Icahn & Co. made 10 times its capital in its first year of existence. 

Throughout my career I have constantly been on the lookout for situations where risk is very negligible compared to the reward.  I believe that today a "no-brainer" exists at Dell.  This is because if you own Dell and opt for appraisal rights, you have a rare opportunity to make a profit without taking risk.  Under the law, if you are dissatisfied with the price that you are being forced to take in a "going private" transaction that you did not vote for, you can go to court for an appraisal.  The reason that doing this is a "no-brainer" is because the law allows you to change your mind up to 60 days after the transaction is consummated.  All you have to do is notify Dell before the vote that approved the transaction.

In the case of Dell, even if the Michael Dell/ Silver Lake offer of $13.65 is accepted by shareholders on July 18, Dell has indicated that the merger is expected to be consummated around October.  If that is the case, and if you opt for appraisal, you will have until December to decide if you want the $13.65 or continue on with the appraisal process.  You therefore have a free put under this example until December. You always have 60 days from the actual date that the merger is consummated to change your mind.

As in all "no-brainers", while there is no risk, it does not seem likely that you will make a profit either, so why bother -- but appearances can be deceiving.  On occasion these "no-brainers" make profits and sometimes huge ones.  In the case of Dell, a great many things can occur between now and December to make this trade profitable.  For one thing, Dell may want to settle with those seeking appraisal rights.  Another possibility is that Dell paints a much rosier picture of the company's prospects when the approximately $16 billion loans that Michael Dell/Silver Lake need are being syndicated.  We believe this will make it apparent that the company is worth far more than $13.65 and that can be taken advantage of to fight for a premium well over $13.65But remember, in order to take advantage of appraisal you must notify Dell of your intention to do so before the vote on the merger and you must not vote for the merger. If you don't do both of those things you cannot take advantage of the benefit of the "no-brainer" if that benefit becomes available.

In case you are interested, yesterday we opted for appraisal on the approximately 152 million shares that we own and we are in the process of delivering the applicable documents.  You should be aware that you have only a few more days to exercise your appraisal rights. 

THE PROCESS TO SEEK APPRAISAL RIGHTS TAKES TIME, SO ACT NOW IF YOU WISH TO PERFECT YOUR APPRAISAL RIGHTS AND IMMEDIATELY CONTACT YOUR BROKER AND OTHER ADVISORS.  If you have any questions concerning appraisal rights or wish to seek help or information regarding appraisal rights, contact D.F. King & Co., Inc. at 1-800-347-4750 or dell@dfking.com.  They will take your information and provide it to people at Icahn who will call you back.

For a detailed discussion of the process for perfecting and exercising appraisal rights, see page 180 of the Definitive Proxy Statement on Schedule 14A filed by Dell with the SEC on May 31, 2013. 

We urge stockholders not to vote for the Michael Dell/Silver Lake transaction. And we urge those that are not voting for the transaction to take advantage of the "no-brainer."  In our opinion this approach gives you two chances to win,   THE FIRST CHANCE, and the one that we desire to have happen, is that the Michael Dell/Silver Lake transaction is defeated, in which event we will move on to the annual meeting, giving stockholders the opportunity to elect our slate of directors and have the benefit of our previously described $14 Dell self tender proposal.  THE SECOND CHANCE comes if the Michael Dell/Silver Lake transaction is approved by the other stockholders and is consummated, in which event you will at least have a shot at the "no-brainer".   Why miss that opportunity to have a second bite at the apple?  


Sincerely

Carl C. Icahn
Chairman
Icahn Enterprises, L.P.


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 SCHEDULED TO BE HELD ON JULY 18, 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.

SOURCE Carl C. Icahn




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