Barring any more surprises, it looks like Michael Dell, private equity firm Silver Lake, and Microsoft will succeed in their months-long effort to take PC maker Dell private. Today, Institutional Shareholder Services, which makes recommendations to investors on shareholder proposals, supported the Dell buyout offer over a proposal from two of Dell’s largest outside shareholders, Carl Icahn and Southeastern Asset Management.
That’s a big loss for Icahn, who proposed to recapitalize Dell and put in a good chunk of his own money as part of the $5.2 billion he raised to finance the offer. It adds to the mixed record of Icahn, who has been one of the most active of the activist investors this year. Dell is just one of four companies Icahn has targeted so far this year in 13D filings, which anyone who intends to be an activist investor after acquiring more than a 5% stake in a US-listed firm must submit to the Securities and Exchange Commission.
Three years ago, Icahn lost another big fight over a leveraged buyout. In 2010, Icahn offered to buy power company Dynegy after he and other shareholders opposed a sale of the firm to private equity company Blackstone. Dynegy investors ended up opposing Icahn’s deal, too, and Icahn ended up losing his entire investment after the company went bankrupt.
Icahn also lost most, if not all, of his investments in video rental firm Blockbuster (which Icahn called his worst investment ever), home builder WCI Communities and Texas bank Guaranty Financial Group, all of which went bankrupt.
But he’s also had huge wins with Netflix, the movie-streaming service, and with organic food company Hain Celestial Group, both of which garnered a more than 200% return on his investment, as well as software firm Mentor Graphics.
Icahn isn’t known to be an expert on the companies in which he invests, but he is seen as having a great gut instinct that allows him to win big when he makes the right pick. He also loves a good fight. And that’s why, despite his mixed record, companies, rivals and investors never count him out.
Even with Dell, Icahn may still come out a winner despite the failure of his bid. Icahn bought Dell stock at below the Michael Dell buyout offer of $13.65 a share. That means Icahn should still make money if that deal wins shareholder approval during a vote on July 18. And in the end, making money is more important than winning.