Dell CEO’s buyout bid in tatters after board move
Print Edition
Dell’s board rejected CEO Michael Dell’s attempt to change the voting rules for his bid to buy the slumping personal computer maker, a decision that is likely to doom the deal.
But the endangered buyout could still get a reprieve if Michael Dell and his allies accept a counterproposal that would extend the voting period for a third time and allow a bigger pool of shareholders to cast ballots.
The rebuff announced on Wednesday marks the latest blow that Michael Dell and his main backer, Silver Lake Partners, have absorbed since reaching an agreement with Dell Inc’s board nearly six months ago to buy the Round Rock, Texas, company for US$24.4 billion, or US$13.65 per share.
A vote on Michael Dell’s offer is scheduled to be held today. He had proposed a change designed to make it easier for that bid to win shareholder approval: In exchange for an extra US$150 million, Michael Dell wanted to exclude shareholders who didn’t vote from being counted as in the opposition column.
Dell’s board turned down that demand, but said it’s willing to postpone today’s vote and give shareholders several more weeks to consider the buyout proposal if Michael Dell and Silver Lake don’t withdraw the slightly higher offer of US$24.6 billion, or US$13.75 per share, dangled before the company last week.
The original bid has faced stiff criticism from a vocal camp of critics led by two of Dell’s largest shareholders, billionaire Carl Icahn and investment firm Southeastern Asset Management, who want to oust Michael Dell as CEO and replace the company’s entire board to pursue different alternatives.
“Michael Dell is facing a real uphill battle now, but it seems like things are changing just about every day,” said analyst Shannon Cross of Cross Research.
Investors on Wednesday appeared resigned to the deal unraveling. The company’s stock fell to its lowest levels since the buyout agreement was announced in early February. The shares shed 20 cents to close at US$12.66 after falling as low as US$12.28 during the session.
A slightly different set of shareholders would be able to weigh in on the higher offer because the board said it’s ready to change the voting eligibility in a nod to Michael Dell and Silver Lake.
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