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Dell May Postpone Vote: Reports

Pushing off the vote would give Michael Dell and Silver Lake the chance to raise their $13.65-a-share bid

The stock market and its pundits spent Tuesday adjusting to reports that there may not be a shareholders vote on the future of Dell after all and that come Thursday morning the special committee of the Dell board in charge of sorting out offers for the company may decide to postpone publicly tabulating the results because the $24.4 billion offer put on the table by founder Michael Dell and private equity house Silver Lake Partners has failed to garner enough support.

Pushing off the vote would give Michael Dell and Silver Lake the chance to raise their $13.65-a-share bid or shrug off the pressure being exerted and decide once and for all that that’s as good as they can do. It would also give shareholders the chance to change their vote with or without a sweetener.

Bloomberg says it heard the vote could be put off by a week. It also said only the naysayers have voted so far, not the bulk of the shareholders.

It’s basically come down to gamesmanship. The Financial Times claims some of the company’s largest stockholders have privately given Michael Dell an 11th-hour ultimatum to raise the bid or risk losing his chance to regain control of the company he started 30 years ago.

They have the tactical advantage, the paper pointed out. They can change their vote up until the bitter end,

BlackRock, which holds a little over 3% of Dell’s shares and has previously calculated the company’s ultimate turnaround as a private company is a long shot, is reportedly the latest of the institutional players to threaten to vote against Michael’s privatization plan. If true, that would make a little over 21% of the company’s outstanding shares opposed to the leveraged buyout at the $13.65-a-share price.

Michael Dell and Silver Lake need 42% of the outstanding shares behind them to succeed. Michael Dell and certain other insiders can’t vote their shares under an agreement with the special committee.

Dell closed at $13.02 a share Tuesday, up from a late morning price of $12.99, indicating Wall Street’s doubts. The special committee has warned that the stock could fall to somewhere between $5 and $9 if the LBO doesn’t come off.

If it ultimately doesn’t, activist stockholder Carl Icahn is threatening to catapult the company into a proxy fight over control of the board. Michael Dell can vote his 16% position then when he may also be fighting to keep his job as CEO. Icahn has threatened to replace him if his slate gets in.

Icahn’s latest counterproposal is for the company to borrow money and spend its treasure to buy back up to 1.1 billion shares at $14 apiece and offer a warrant for every four shares tendered. The warrant would entitle the holder to buy one Dell share for $20 anytime within the next seven years. Of course that would depend on the remaining stub of a public company still being viable.

Icahn puts the value of the proposition at between $15.50 and $18 a share.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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