Dell buyout vote delayed amid Icahn-led shareholder mutiny
Dell postponed a crucial vote on CEO Michael Dell’s US$24.4 billion buyout offer to July 24, buying time to solicit more proxy votes and drum up more support despite winning over several large swing shareholders at the eleventh hour.
The company co-founder and partner Silver Lake fell short of the votes needed to push through the largest buyout since the financial crisis, even though Vanguard and BlackRock Inc are now on board with the proposal, a source familiar with the matter said on Thursday.
Dell shares climbed 2 per cent to US$13.15, still lagging the US$13.65 that Michael Dell and his private equity partner are offering shareholders.
Vanguard and BlackRock had previously opposed a deal that many say undervalues the world’s No 3 PC maker, but ultimately switched sides. Yet the proposal still needed another 150 million shares to pass as of early on Thursday morning, the source said, requesting anonymity because the matter is not public.
Board member Alex Mandl, chairman of a special committee overseeing the buyout, set the new meeting date for Wednesday.
Other investors previously seen as swing votes, such as State Street, Bank of New York Mellon and Invesco also voted in favour of the deal on the eve of the shareholders’ meeting, the source said.
It is unusual for corporations to adjourn shareholder meetings on such short notice, but governance experts say it can be done if the company bylaws allow it.
T. Rowe Price Group, Highfields Capital Management, Pzena Investment Management and Yacktman Asset Management have previously voiced opposition to the deal.
Representatives of the investment firms were not immediately available for comment.
Complicating matters, billionaire investor Icahn, who has amassed an 8.7 per cent stake in Dell, is leading a charge against the buyout with an offer of his own.
In the week leading up to the meeting, Icahn’s team and Dell’s special board committee, which supports the CEO’s proffered deal, have flooded shareholders with opposing letters and documents to argue their respective positions.
Michael Dell and Silver Lake have resisted calls, including from Dell’s special committee, to raise their offer.
Under so-called majority-of-the-minority voting provisions, a majority of Dell shareholders excluding Michael Dell’s roughly 16 per cent stake would have to vote for the buyout for it go through.
The proposed buyout needs about 735 million shareholder votes to pass.
Shareholder Ed Benson from San Antonio had expected the meeting to be adjourned.
“It’s very hard to acquire that many votes,” said Benson, calling Icahn “one of the worst vultures in corporate America.”
The activist investor was not immediately available for comment.