Dell Committee Mulls Buyout Vote Delay

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Michael Dell

Dell’s directors are reportedly considering a delay for the shareholder vote over the troubled buyout proposal

However, getting more money for the company may not happen. Michael Dell and Silver Lake officials reportedly are pushing back at the idea of raising the price of their offer. The news site AllThingsD, citing “sources familiar with the most recent conversations” among the two said that Michael Dell and Silver Lake are “prepared to see the deal blow up” rather than raise their bid.

Michael Dell’s bid to buy the world’s third-largest PC maker and take it private has faced headwinds since it was announced in February. Dell executives are trying to lessen the company’s reliance on the shrinking PC market by becoming more of an enterprise IT solutions and services provider, and the founder and CEO has argued that he could accelerate those efforts as a private company that it out of the glare of Wall Street.

Bid Support

However, some shareholders have argued that the $13.65-per-share price undervalues Dell and have vowed to vote against it.

carl icahnIcahn and Southeastern are offering a counterbid that calls for the company to buy up to 1.1 billion shares for $14 (£9.27) each, with a promise to shareholders to allow them to buy more shares in the future if the stock price reaches $20 (£13.24). Icahn is pushing the board’s special committee, which is backing Michael Dell’s bid, to declare Icahn’s bid superior and to let shareholders vote on it. At the same time, he is urging shareholders to vote against Michael Dell’s offer.

The special committee has questioned Icahn’s financing and has declined to call the deal superior to Michael Dell’s. In addition, the CEO got a boost from the influential Institutional Shareholders Services (ISS), which is recommending that investors accept his offer.

The special committee on 16 July reiterated their support of Michael Dell’s bid. In a letter to shareholders, the committee said a sale to the CEO and Silver Lake is still a better option than Icahn’s bid, which would foist even more debt on a company “already facing significant challenges from competition and from the rapid pace of technological change.”

IDC’s Del Prete also questioned Icahn’s bid, saying he believed the investor was too optimistic in his vision of Dell, which is still being impacted by the contracting global PC market and has yet to see strong results from its enterprise efforts.

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