Published On: Thu, Jul 18th, 2013

Dell deal delayed

Michael Dell / getty

Michael Dell / Getty

/ By Stanley Green / 

Michael Dell’s seemingly unrelenting efforts to mastermind a $24.4 billion buyout of the company he founded have appeared to have suffered what makes like a major setback. At the very last minute the special committee of Dell shareholders decided to place a temporary adjournment the shareholder vote on the deal apparently to avoid the risk of losing at the ballot box.

Postponement of the vote will surely have come as a major shock to Dell, with several of his major investors reportedly having changed their votes to be in his favor, meaning that Michael Dell was reportedly about 150 million votes short of gaining approval for his transaction.

However the unexpected delay may well give Michael Dell and his co-pilots in the deal, private equity firm Silver Lake, another five working days, until July the 24th to secure additional shareholder support for their buyout, with the possible last resort being to increase their $13.65-a-share bid for the company.

For now the vote delay can be regarded as a victory for investor Carl Icahn and his principal allies in the bid, Southeastern Asset Management, who have been working in tandem to put the blocks on Michael Dell’s deal.

Icahn has been constantly critical of Dell and the company he founded, stating just a few days ago in a television interview that the board was one of the worst he has ever seen. When the news broke on the vote postponement Icahn again launched a tirade complaining that it was impossible to imagine a political election contest where one side could push off the election to wait for a better day to hold the election.

Those fortunate enough to be sitting on the sidelines and observe the comings and goings have speculated that the vote delay doesn’t signal an end to Michael Dell’s bid to take the company that he founded private. Expectations are that the battle of nerves and will continue right down to the final wire with some of the major shareholders applying even more pressure on Dell to increase his bid for the company.

In the meantime their pressure may be having an unexpected but welcome side effect, with Dell shares seen to be rallying on the news of the postponement, up by more than 2% in Thursday morning trading after they had been dropping in value all week.

 

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