Dell Committee Mulls Buyout Vote Delay

More trouble for Michael Dell’s $24.4 billion (£16bn) bid to buy Dell and take it private, after reports suggest the board of directors are considering delaying the 18 July shareholder vote.

Citing an unnamed “person with direct knowledge of the situation,” Bloomberg said 16 July the special committee assigned by the directors to investigate the company’s future may postpone the vote for a week to give it time to seek a higher bid or to gain more support for the proposal put forth by Michael Dell and Silver Lake Partners.

Vote Delay?

The New York Times said the special committee has been making it clear for days that it would prefer to postpone the shareholder vote than see the bid rejected.

The news comes two days before shareholders are set to vote on the Dell-Silver Lake offer, and as activist investor Carl Icahn makes an aggressive effort to derail the deal and gain support for his counteroffer, which among other things would keep Dell as a public company. Icahn, who owns 8.7 percent of Dell’s share, is now the largest outside investor in the company.

Publications likes the Wall Street Journal and Forbes are reporting that the shareholder vote is too close to call, with major investors like T. Rowe Price, Southeastern Asset Management – which also is a partner in Icahn’s counterbid – and investment firm BlackRock among those that are casting votes against Michael Dell’s $13.65-per-share (£8.73) offer.

Michael Dell in the past has refused to increase his offer, noting the 25 percent premium shareholders would realise with the proposal. However, some industry observers believe that given how close this vote appears to be, that could change.

“I think [a delay in the vote] also opens up the possibility that the Michael Dell team will come back and potentially raise their offer,” IDC Chief Research Officer Crawford Del Prete told Bloomberg in a televised interview.

Nervous Shareholders

Del Prete said there are some shareholders who would be happy to accept Michael Dell’s offer, take the money now and not risk any more deterioration in the stock price, and those shareholders will get more anxious as the voting day nears. However, delaying the vote would indicate the board of directors’ nervousness about the outcome of a vote.

“It basically says they want to take more time and weigh their options,” he said. “It definitely opens up the possibility that they want to do some more selling to existing shareholders to try to sell their story.”