Dell: Future-Determining Vote Delayed for Now
Rumors have been swirling that the much-anticipated July 18 meeting of Dell’s (NASDAQ:DELL) shareholders – held to determine whether the personal computer manufacturer would go private — would be adjourned before the vote was finalized. And, that is indeed what happened.
In a filing submitted to the Securities and Exchange Commission Thursday morning, the special committee of Dell’s board, which has been charged with overseeing the go-private process, pushed the vote to July 24, noting that the postponement would “provide additional time to solicit proxies from Dell stockholders.”
A source told Bloomberg on Wednesday that the committee was considering a delay to Thursday’s vote, a move that would allow shareholders to rethink their votes.
Thursday was long expected to be a day of judgement for Dell. For months, shareholders Carl Icahn and Southeastern Asset Management have been playing tug-of-war with the company’s founder and chief executive, Michael Dell, over the future of the personal computer manufacturer. July 18 was supposed to be the day shareholders voted on whether to accept the $24.4 billion leveraged buyout offer, which Mr. Dell and partner private-equity firm Silver Lake made in early February.
The adjournment indicated that Mr. Dell’s proposal lacked enough support from shareholders. Reuters reported that holders of approximately 30 percent of Dell’s outstanding shares opposed the $13.65-per-share offer ahead of the vote. That number includes both Icahn and Southeastern, authors of a rival proposal for the company’s future, as well as Yacktman Asset Management, T. Rowe Group’s (NASDAQ:TROW) investment unit, and Pzena Investment Management (NYSE:PZN). Together, Icahn, Southeastern, Yacktman, and Pzena Investment Management hold more than 14 percent of the outstanding shares, while T. Rowe Associates owned 4.4 percent of Dell’s total shares as of March 31, the most recent figure available.
Because the buyout protocol set out by the special committee prevents insiders such as Mr. Dell from voting their shares, only a majority of 42 percent of shares are needed to approve the privatization proposal.
The postponement will likely anger Icahn, owner of 8.7 percent of Dell’s shares. In an open letter addressed to shareholders, Icahn wrote Wednesday that the committee must allow the final vote to occur as scheduled, urging shareholders once more to oppose the Mr. Dell-led, go-private transaction. “Can you imagine a political election contest where one side could push off the election to wait for a better day to hold the election — a date when it is hoped they might do better in the vote than they would have done on the originally scheduled election date?” he wrote.
Already, some shareholders appear to have switched sides. Previously, Vanguard Group, BlackRock (NYSE:BLK), and the State Street Corporation (NYSE:STT) had indicated they opposed the deal, but The New York Times reported that a source briefed on the matter said a number of institutional investors, with those three shareholders among them, had switched their votes to “yes” overnight. This move gives the leveraged buyout a greater hope of success.
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