WILMINGTON, Del. — A Delaware judge dealt a blow to activist investor Carl Icahn’s effort to stop chief executive and founder Michael Dell’s $24.8 billion buyout offer for the struggling computer maker.
He refused to fast-track proceedings on Icahn’s claims that Dell Inc. directors have betrayed their duties to shareholders in trying to win support for Michael Dell’s bid.
After three delays, Dell’s board has set a special shareholder vote Sept. 12 for Michael Dell’s offer of $13.75 per share, plus a 13-cent dividend. That is to be followed by an overdue annual meeting Oct. 17.
Icahn, who seeks to oust Michael Dell as chief executive, wanted the vote and annual meeting to be held on the same day. That would give shareholders a chance to vote on a rival board he is offering as part of his proposal, a complex alternative plan that he says would be worth at least $15.50 per share.
Icahn claims that delaying the annual meeting until October could torpedo his financing pla
ns for his proposal and is part of a deliberate effort to thwart his competing bid.
He also argues that Dell directors have unfairly favored Michael Dell by moving up the investment date that makes a shareholder eligible to vote and by counting only votes, excluding those controlled by Michael Dell’s group, that are actually cast. Under a past deal condition, shareholders who did not vote were counted as being against Michael Dell’s buyout.
Icahn argues that the changes were made to favor the buyout’s prospects and win votes from short-term investors looking for a quick profit.
But Chancellor Leo Strine Jr. said Friday that Icahn has offered no justification for an expedited hearing on what the judge indicated were dubious claims, and no evidence that the special committee of Dell directors supervising the proposed deal has not acted independently or in good faith.
Strine noted that Icahn has revised his alternatives to Dell’s buyout offer without making a firm superior bid, while the special committee has extracted an additional 23 cents per share from Dell and private equity firm Silver Lake Partners. He also noted that the termination fee due to Dell and Silver Lake if a competing bid is successful has been reduced from $450 million to $180 million.
Strine said Dell shareholders can reject Michael Dell’s buyout offer if they think it is inadequate and back Icahn’s directors in October if they think that is in their best interests.