Dell board won’t change rules on buyout vote

Founder and chairman Michael Dell and his investment partner are negotiating a takeover of Dell Inc.
Alexander F. Yuan/File/associated press
Founder and chairman Michael Dell and his investment partner are negotiating a takeover of Dell Inc.

NEW YORK — Michael S. Dell’s effort of several months to buy the company that bears his name was thrown into jeopardy Wednesday, as a special committee of the computer maker’s board refused his demand to change the voting rules on the huge buyout.

Dell shareholders are set to decide the fate of the deal on Friday, absent an 11th-hour change of heart from either the board or Dell and his partner, the investment firm Silver Lake. As it stands, the offer of $13.65 a share, or a total of $24.4 billion, to take the company private, is likely to lose the shareholder vote, people close to both sides say.

If Dell is unable to take his company private, the company will face even fiercer competition in the already cutthroat PC business.


And the company’s board and the prospective buyers have warned that Dell’s stock could plummet into the $8 range if the deal collapses. Concerns about the deal’s prospects led to a 1.56 percent drop on Wednesday, to $12.66.

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Last week, Michael Dell and Silver Lake said they would raise their proposal by 10 cents, to $13.75 a share, in exchange for the committee’s declaring that absentee votes would no longer count as “no” votes.

In response, the Dell special committee told them that it would accept their offer if they withdrew their request on the voting rules change.

A representative for Michael Dell and Silver Lake declined to comment. But a person close to the two argued that they were unwilling to budge.With the vote close, a change could put the buyers over the top.

But billionaire Carl C. Icahn, a major shareholder, and his main ally, Southeastern Asset Management, have fought the takeover effort. With roughly a 12.5 percent stake and Dell’s inability to vote his 16 percent stake, as well as the large number of absentee shares, the two hold enormous sway over the outcome.


In a statement on Wednesday, Icahn and Southeastern offered tepid praise for refusing to budge on the voting rules. But they again called on Dell’s directors to schedule an annual meeting and let the two sides fight over control of the board.