Dell delays shareholder vote to July 24

Dell delays a vote on its $24.4 billion buyout to take the company private in an attempt to rally support.
Written by Andrew Nusca, Contributor
Photo illustration: Andrew Nusca

Just moments ago, Dell announced that it will delay a vote on its $24.4 billion buyout to take the company private in an attempt to rally support.

The new vote is scheduled for July 24 at 6 p.m. Eastern.

Recent reports have suggested the company did not have enough shareholder support (or attendance) to further its cause, leading to a "nail-biter" meeting this morning that pushed the company "to the brink" and threatened to destroy its value.

Even in the final moments before the meeting, reports suggested that shareholders were still anxious and changing positions. But the special committee of Dell's board of directors suggested days ago that it would adjourn Thursday morning's vote if shareholder activity put it in limbo, and that is precisely what happened today.

The postponement gives the directors time to either extract a higher bid from Michael Dell and his investment partner Silver Lake or get the buyers to declare their current offer of $13.65 per share final.

It's a conceptual win for billionaire activist Carl Icahn (Dell's No. 2 shareholder, behind its founder) and the asset management firm Southeastern Asset Management, which have argued that the proposed sale would shortchange investors.

Icahn and company contend that their proposed plan, the repurchase of 1.1 billion shares for $14 each, would deliver more shareholder value yet still involve them in the company's planned resurgence. The Dell committee argues that Icahn's plan burdens the company with significant debt and threatens the company's existing board of directors, which Icahn would be allowed to replace under the terms of his plan.

There is also silver lining in the postponement for Michael Dell and Silver Lake, which risked losing the company without substantial support. While the group certainly doesn't want to sweeten the deal any more than it needs to, the additional week gives them additional time to drum up more support for their existing proposal and avoid what appeared to be a disastrous conclusion—even if Dell and Silver Lake previously indicated that they would be happy letting the deal fall apart if their proposal was deemed insufficient.

The high-stakes game of chicken resumes on Wednesday evening with the same potential outcomes. The first: Shareholders approve the deal, signaling defeat for Icahn and company but giving him ample opportunity to extract additional concessions during closing. The second: Shareholders reject the deal, signaling defeat for Dell and Silver Lake and pitting Icahn against the company's existing directors for a messy, drawn-out battle for control.

See you next week for round two.

Previously on ZDNet:

Editorial standards