The battle for who will control Dell is supposed to be settled on Friday, but Dell’s board has given Michael Dell one more chance to get the vote delayed, and possibly win the war.
This even though he lost the biggest battle yet on Wednesday.
Wednesday, Dell’s board refused to change a rule on how shareholder votes are counted.
Shareholders are being asked to vote on a deal that allows Michael Dell to take his company private, backed by venture capitalists Silver Lake Partners (and a $2 billion loan from Microsoft, too). Dell had offered to increase his offer by 10 cents per share, to $13.75, if the board agreed to the rule change.
As the rule stands now, shareholders had to own stock on June 3 and vote in favour of the Dell/Silverlake buyout in order for it to pass. That means that stockholders who do not vote at all will be counted as a “no” against the buyout. As of last count, about 23% of shareholders didn’t vote.
Dell wanted shares that were not voted to be taken out of the tally, meaning that the only votes that would count would be the ones cast.
When Dell proposed the rule change, he wrote an open letter to shareholders in which he said, “The decision is now yours. I am at peace either way and I will honour your decision.”
Clearly, however, that’s not how he feels since the remainder of the letter strenuously argued that shareholders should take his offer.
But, even as the board refused to change the rule, it gave him one more chance to win.
The board said that if Dell is still willing to offer $13.75 a share, the board will delay the vote again (it was originally scheduled for July 18). It could also possibly let shareholders who purchased shares after the June 3 cutoff date to vote on the buyout.
If Dell won’t keep the extra 10 cents a share on the table, the vote will proceed on Friday and Dell isn’t favoured to win.
Billionaire activist Carl Icahn, who is fighting Michael Dell for control of the company doesn’t like it. In a letter to shareholders, he wrote:
“Let the vote happen on Friday. Michael Dell has said he is “at peace either way”. We are glad to hear it! It is time to let the proposed freeze-out merger die.”
While the board focuses on the merger vote, it has delayed announcing the date for the annual meeting where shareholders can vote on Icahn’s proposed replacement board members. If Icahn gets his choice of board members, Michael Dell would be fired from the CEO job.
Icahn and his supporters “fear” that by pushing off the annual meeting, Michael Dell will use the time to buy up more shares of Dell to “keep Dell under his control if and when his freeze-out merger is finally allowed to be rejected.”
He is urging the Dell board to go so far as to “prevent Michael Dell from buying votes by buying shares.”
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