Dell Inc. is scheduled to convene a crucial shareholders meeting Thursday to decide the fate of a $24.4 billion company buyout plan.
But it was uncertain Wednesday whether the votes will actually be counted.
Media reports on Tuesday, citing unnamed sources, had reported that members of the special committee to Dell Inc.’s board of directors were considering postponing the actual count of the votes.
Analysts have said any postponement of the special shareholders meeting would indicate that the vote on the buyout is extremely close and that the company is working to sway shareholders.
If the meeting is adjourned, it is uncertain when it would reconvene. The delay might be several days or even weeks.
The buyout offer, which amounts to $13.65 a share, is being offered by CEO Michael Dell and his financial ally, Silver Lake Partners. Their offer was tentatively accepted by the Dell board in early February.
But several major shareholders have objected to the offer price almost from the beginning, saying that the share price undervalued Dell Inc.’s potential prospects as one of the world’s larger information technology companies.
Two major investors, billionaire activist Carl Icahn and Southeastern Asset Management Inc. of Memphis, are leading the fight to defeat the buyout. Other major investors, including T. Rowe Price Group, have said recently that they intend to vote against the buyout. The Wall Street Journal on Wednesday projected the count of known planned negative votes at close to 30 percent of Dell Inc. shareholders.
In a letter to shareholders, Icahn on Wednesday argued against postponing the shareholders vote.
“Can you imagine a political election contest where one side could push off the election to wait for a better day to hold the election — a date when it is hoped they might do better in a vote than they would have done on the originally scheduled election date?” Icahn wrote. “The company must allow a final vote to be completed on July 18 and not try to postpone the vote to a later date.”
Speaking Wednesday evening at the CNBC Institutional Investor “Delivering Alpha” conference, Icahn said if he loses on Dell Inc., he’ll shake Michael Dell’s hand and walk away.
“I’ve done that in the past. … If you look back at all these guys it really isn’t a personal thing when I lose. I call up these guys and congratulate them,” the Wall Street Journal’s MoneyBeat blog quoted Icahn as saying. “If Dell wins the proxy fight, if it goes to a proxy fight … I don’t know if he’ll talk to me, but I’ll call him up and say, ‘Congratulations, I’m a big minority holder, I’m gonna try to figure out how to get the hell out of this damn thing.”
Icahn also was asked about the possibility that Michael Dell will raise his buyout offer.
“My worry is if he does raise that some of the big institutions will go over to him,” he said.
If the buyout plan is defeated, Icahn urged Dell Inc.’s board to move quickly to schedule a regular shareholders meeting at which Icahn will propose his own slate of directors.
“Our slate (of directors) has met and unanimously supports our proposed Dell self-tender offer,” Icahn wrote.
Icahn’s latest proposal for the company calls for offering $14 a share for 72 percent of Dell’s shares and keeping the company public. Icahn recently has said he would offer a warrant for every four Dell shares, which would enable investors to buy Dell stock for $20 a share sometime in the next seven years. Dell’s stock has not traded above $20 a share since 2008.
If the vote is held and the buyout wins approval, Michael Dell has said he intends to take the company private in order to complete the business transformation that his company started several years ago. The company has made more than $13 billion in technology acquisitions since 2008 to help turn the company into a leading supplier of advanced hardware, software and services for large and mid-sized enterprise customers.
The company has made progress in that direction, but it says two-thirds of its revenue is presently related to personal computer sales, which remain in a global slump.
If the buyout proposal is defeated, Dell Inc. will remain a public company and Michael Dell will remain as CEO. He has pledged to work to improve the company and to fight the sort of restructuring deals that Icahn is suggesting. But analysts say a defeat of the buyout would likely trigger a power struggle between Michael Dell and Icahn for control of the company.
Analysts said Dell’s special committee appears to be considering a delay because it knows the vote is close and the outcome is uncertain.
Adjourning the meeting, said analyst Ashok Kumar with Maxim Group, would give the company some more time to gather shareholder support either through persuasion or by offering a slightly better price.
But Kumar noted that big investors are taking a big risk by coming out against the buyout.
“If the deal is voted down, the stock will go in only one direction and that is down,” he said.
Dell Inc.’s shares fell in active trading Wednesday, and Kumar said that was probably because investors “are concerned the buyout won’t go through.” The stock closed at $12.88 a share Wednesday, down 14 cents, or 1.1. percent.
“Everyone knew this would be close, and it is close,” said analyst Patrick Moorhead with Moor Insights & Strategy. “Just like in an election, they are counting the likely votes, and they are leaving themselves some room, so they have time to make their case or possibly change their offer a little bit.”
Technology analyst Roger Kay with Endpoint Technologies Associates said the strength of the opposition to the buyout price might be greater than the Dell Inc. board was expecting.
“It has totally spooked the Dell team, which was expecting opposition, but nothing as insane as this. It is a mad dog situation,” he said.
Go to www.statesman.com and www.mystatesman.com for live updates as the Dell Inc. shareholder meeting unfolds.