Dell Buyout: Icahn Bid Won't Stop Sept 12 Shareholder Vote

Dell Buyout: Icahn Bid Won’t Stop Sept 12 Shareholder Vote

Written by DH Kass 1
August 19, 2013

A judge apparently has cleared the way for a Dell shareholder vote on September 12, which may result in the PC giant going private. The Delaware Chancery Court rejected activist investor Carl Icahn’s bid to fast track his lawsuit to thwart the scheduled September 12 Dell shareholder vote.

A corporate law judge in the Delaware Chancery Court rejected activist investor Carl Icahn’s bid to fast track his lawsuit to thwart a scheduled September 12 Dell (DELL) shareholder vote on founder Michael Dell’s and Silver Lake’s revised $24.8 billion equity buyout bid.

Chancellor Leo Strine Jr. nixed Icahn’s argument that Dell’s Special committee unfairly tilted the voting rules in Michael Dell’s favor to guide shareholders away from Icahn’s competing offer. He also rejected Icahn’s claim that Dell’s board had not fulfilled its fiduciary duties.

According to an account in The Wall Street Journal, Chancellor Strine told Icahn if he wanted to win control of the company he should field a better offer than Michael Dell’s, a suggestion remarkably close to what Dell’s Special Committee has offered on a number of occasions.

“I think the special committee would dance in the streets if the Icahn group would make a topping bid that was firmly financed and would buy out everybody’s shares at a greater price,” Chancellor Strine said.

With Icahn’s financing reportedly set to run out on Sept. 30, fast-tracking his case was seen as vital to his chances to impede the Sept. 12 shareholder vote. Barring a major glitch, the vote, based on Michael Dell’s upwardly revised offer of $13.75 a share, a special $0.13 dividend and an $0.08 regular dividend–along with a set of revised rules approved by Dell’s Special Committee to allow only actual voting shares to count–will go on as scheduled.

Icahn’s next play is at Dell’s upcoming board meeting, slated for October 17, some five weeks after the shareholder vote on Michael Dell’s privatization proposal, when he can put up his own candidates for seats. Icahn’s best chance to wrest control of the company now rests with shareholders rebuffing Michael Dell’s bid on September 12 and electing Icahn’s board candidates on October 17.

Accordingly, Chancellor Strine said he will fast track a hearing to address Icahn’s argument that Dell improperly delayed its annual meeting, as he is compelled to by statute, according to the Journal’s report. The judge cautioned Icahn that bid is likely to go the way of the other, the report said.

Less than two weeks ago, Icahn upped his stake in Dell, buying 4 million shares at $12.94 per share to increase his ownership position to 8.9 percent, second only to Michael Dell’s approximate 16 percent stake in the company.