Dell Inc may delay a shareholder meeting on a $24.4 billion buyout offer from founder Michael Dell and private equity firm Silver Lake Partners, with the pivotal vote too close to call, a source tells Reuters.
(Reuters) – Dell Inc may delay a shareholder meeting on a $24.4 billion buyout offer from founder Michael Dell and private equity firm Silver Lake Partners, with the pivotal vote too close to call, a person familiar with the matter said on Tuesday.
The board of the No. 3 PC maker is considering the delay as part of contingency planning for the vote, which is now scheduled for Thursday, July 18, the person said.
Activist investor Carl Icahn has spearheaded opposition to the bid and presented a proposal of his own with Southeastern Asset Management Inc, although this will not go to a vote on Thursday.
The special committee will likely make a decision by Thursday morning, based on whether enough votes have been cast to indicate the buyout would be blocked. Dell’s board has set up the special committee to independently assess the best option for shareholders, without influence from Michael Dell, who is the company’s chairman and chief executive officer.
Delaying the vote would allow Michael Dell and Silver Lake to either raise their bid or declare it their best and final offer. It would also give shareholders an opportunity to change their minds and recast their votes, Bloomberg reported earlier on Tuesday, citing a person with direct knowledge of the situation.
Officials for Dell and its special board committee, and Silver Lake, declined to comment.
In afternoon trading, Dell stock was down 1.1 percent at $13. That is below Michael Dell and Silver Lake’s offer of $13.65 per share, indicating that more investors now see the outcome of the buyout vote as uncertain.
It is unusual for companies to delay such a special meeting of shareholders so close to the date but it is possible, said Jesse Fried, professor of law at Harvard University.
“Usually there is a delay because the management wants to lobby more shareholders,” Fried said. “Doesn’t usually mean the terms of the deal are going to change.”
But the Michael Dell-Silver Lake deal was announced on February 5 and Dell’s special board already has had many months to convince shareholders.
Dell’s special committee has warned that the stock might drop to anywhere between $8.67 and $5.85 if shareholders reject the buyout, leaving them with a company in decline as consumers continue to snub PCs in favor of tablets and smartphones.
Dell independent board member and businessman Alex Mandl is the chairman of the four-person board committee that also includes former co-director of Goldman Sachs’ Americas equity research unit Laura Conigliaro, Marathon Oil Chief Financial Officer Janet Clark and consulting firm Duberstein Group CEO Kenneth Duberstein.
Earlier on Tuesday, CNBC reported that BlackRock Inc, which has a stake in Dell of more than 3 percent, was likely to vote against the buyout. A BlackRock spokesman declined to comment.
On Monday, T. Rowe Price Group Inc, which has a roughly 4 percent stake in Dell, affirmed its opposition to the buyout through a statement.
Many other shareholders, including Highfields Capital Management, Pzena Investment Management and Yacktman Asset Management, have also said they would vote against the offer because they see it as too low.
Nevertheless, all three major shareholder advisory firms have recommended Michael Dell’s offer, potentially influencing the decisions of a plethora of small mutual funds that typically follow their lead.
Icahn has argued since March that Dell’s founder is trying to steal the eponymous company away from shareholders almost 30 years after he started it out of his college dorm room with $1,000.
Icahn and Southeastern announced their latest alternative offer for Dell last week. It calls for a buyback of up to 1.1 billion shares at $14 apiece and a Dell warrant offered for every four shares held.
Each warrant would entitle the holder to buy one Dell share for $20 each within the next seven years.
Icahn estimates the value of his latest offer at $15.50 to $18.00 per share. But for his proposal to be put forward for consideration by Dell shareholders, he must first succeed in having Michael Dell’s offer voted down and then win enough shareholder support to replace the members of Dell’s board with his own nominees.