Don’t Believe The Hype — The Dell Deal Can Happen Without Its Biggest Shareholders

Micheal Dell
Micheal Dell

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If you’re following the deal to take Dell private closely, you know that that the companies two biggest shareholders (outside of founder Michael Dell) have voiced their opposition to the $24.4 billion sale.Both Southeastern Asset Management and T. Rowe Price say that the price tag “does not reflect the value of” the company, so they’ll vote against Michael Dell and private equity firm Silver Lake.

The thing is, as Fortune’s Dan Primack pointed out in his daily newsletter this morning, that might not matter. Check out the maths:

So let’s put this in context: What Silver Lake needs is for a majority of Dell shareholders not named Michael Dell to approve the deal. Not a supermajority, but just 51% — or around >43% of outstanding shares, once Michael Dell’s stake is excluded. SAM and T. Rowe only hold around 13% combined, while the 10 largest outside holders (including SAM and T. Rowe) hold less than 29%. In other words, the big institutions alone don’t have the mathematical power to stop this. Instead, they are banking on their reputational powers of persuasion (i.e., if the large lead, the small will follow).

So if the big shareholders do manage to sway the smaller shareholders, that might mean a price hike. If that happens, as Primack goes on to point out, Silver Lake may not be able to take that on, but Michael Dell might.

Point is, this deal is still very much in play.