Dell's future gets messier: Shareholders expected to vote against buyout?

Dell's future gets messier: Shareholders expected to vote against buyout?

Summary: The entire $24.4 billion buyout plan could end up being scrapped, based on a new report.

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Dell's future as a private company is looking increasingly unlikely based on a new report on Wednesday.

The Wall Street Journal reported, based on unnamed sources said to be familiar with the deal, that at least three of the biggest shareholder groups are planning to vote against CEO Michael Dell's $24.4 billion buyout bid.

Those firms are said to be the Vanguard Group, State Street Corp., and BlackRock.

See also: Dell's future: What the tech buyer needs to know

Shareholders were expected to vote tomorrow (Thursday, July 18). But, as if things weren't messy enough, that arrangement was also called into question earlier this week.

The possible delay follows a move by prominent Dell investor Carl Icahn last week in which the business magnate dropped hints touting his new proposal to the company founder's plans once again.

Icahn's latest suggestion outlined that Dell would self tender 1.1 billion shares of stock for $14 a share plus one transferable warrant for every four shares purchased. These warrants would allow shareholders to purchase a share of Dell for $20 for seven years. Should Dell shares be worth more than $20, the idea is that these shareholders would benefit.

Here's a quick recap of where things have stood up until early July as company executives fight over whether Dell should revert to operating as a private company.

As of June 5, the Round Rock, Texas-based corporation had two options on the table:

  • An all-cash deal from Michael Dell and Silver Lake Partners for $13.65 per share

  • An alternative from Icahn and Southeastern Asset Management that leverages the company to pay a $12 special dividend and buy up 72 percent of existing shares.

Blackstone was previously involved in the mix, but later dropped out amid the global PC market meltdown.

There have been debates back and forth over whether Michael Dell and company should raise their initial $24.4 billion offer.

Icahn tried requesting a meeting with Dell's special committee on the matter after lining up approximately $5.2 billion in loans to back his alternative buyout bid.

However, the special committee rejected Icahn's bid as "inconsistent".

Concurring with Silver Lake, top proxy advisory firm Institutional Shareholder Services backed the CEO's plan.

Topics: PCs, Dell, Hardware, Tech Industry

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7 comments
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  • Icahn the true option

    For that a change is necessary in the company? Up to now practically that makes the high address of the company it is to copy to other, doesn't have own ideas. Icahn a visionary person, would give a new focus that would suppose developing the whole potential of this company. The offer of M. Dell almost touches the usury, given the value of this company in the future. It is necessary the change and one new wave en DELL.
    luis river
    • Icahn is bad

      Icahn is the Galactus of corporations. See what he did to TWA. The only thing he's interested in is filling his own pockets at the expense of other shareholders and the company itself!
      danixdefcon5
    • Is Luis River a plant?

      What a stupid uninformed comment.
      IOcahn is a corporate raider short and sweet. He does not bring value to a company. he is making promises that do not come out of his own pocket.
      He is not interested in buying the company; he is holding a gun to Dell's head to pay him off.
      Steve__Jobs
      • Yeah

        Seriously: the guy wants to "buy" Dell, load it up with debt and use that debt to pay himself a "special" $12.00 per share dividend. This bid makes Mitt Romney's time at Bain look like volunteering at a soup kitchen by comparison.
        dsf3g
  • The question on the table is whether Dell should remain a company or not

    For better or worse, it becomes a question of money driving this bus. Mr. Dell has his name on the door so would want to revive and run a thriving business. Mr. Icahn makes money "investing", not providing actual goods and services to the marketplace. His interest in Dell is strictly to make money, wouldn't know how to actually provide a good or service to the common person to save his life at this point.

    The three large-shareholding investment firms listed in the article all bought Dell stock when it was in the $20's so are facing serious egg on their face from investors if they get cashed out at $13.65. What they're probably thinking is if they can preserve/promote the illusion that Dell is worth >$20 long enough to prevent Dell going private this month, they can placate investors while slowly divesting themselves of Dell stock over time and the loss won't look as bad phased over several months/years. Going private this month means they all take a very cold bath for all the world to see.

    Icahn knows nothing about running a PC business, has no interest in knowing how to run a PC business. The purpose of his "independent board" is to fatten Dell up for sale wholesale or in bits and pieces. He knows how to opportunistically make money slicing and dicing businesses, not acquire and grow a business. His vision for Dell has to do with quickly making $$$ similar to flipping a house in real estate, not in bringing new life and health to a company with lots of expensive employees that actually provide goods and services to the public. That isn't what he's in his business for nor does he want to be in business. His money comes from leeching off others' tangible work in "investments".
    vandalii
  • Most investment firms don't know how to run the particular business which

    they invest in. Their prime mission is to invest in companies which will make them money. In the cases where a company is in trouble, like Dell, the intention is to invest, or sometimes, take over the company, with the intent of rescuing it and to turn it around. There are cases where the best that can be done, is to dissolve a company and to start over again, and there are cases where the only solution to shareholders is to take whatever they can while they can, and to let go. Investment companies need to turn companies into profitable entities, otherwise, they lose credibility and they too could go under, and worst, they could open themselves up to government investigations and prosecutions.

    Dell is not dead yet, but, they're still going downhill, and perhaps Icahn might be the best they can hope for. But, my personal preference is for M. Dell to take the company private, and then, if the company has to dissolve, he'll be the biggest loser and not the shareholders.
    adornoe@...
  • I BEG YOU

    Get Rid of Donald Trumps Ugly face from "You May Also Like"

    OF Course,, they think they can get more money now that he has upped the offer,,,,,
    sightsandsounds