UPDATE 2-Opponents of Dell buyout say don't delay vote

Wed Jul 17, 2013 8:12pm EDT

By Greg Roumeliotis and Ross Kerber
    July 17 (Reuters) - Opposition to Michael Dell's bid to take
his computer company private grew on Wednesday, and billionaire
Carl Icahn argued Dell Inc had no right to delay a
shareholder vote, even if the deal looked more likely to fail.
    Holders of nearly 30 percent of Dell stock oppose the $24.4
billion offer by founder Dell and private equity firm Silver
Lake, which is now scheduled for a vote in Austin, Texas on
Thursday morning. That includes shareholders who say they will
vote against the buyout or have been reported to oppose it.
    Dell may decide to delay the July 18 vote to gain time to
win support for the deal, a person familiar with the matter said
on Tuesday, asking not to be identified because the
deliberations are confidential. 
    In an open letter to shareholders on Wednesday, billionaire
activist investor Carl Icahn, who has amassed an 8.7 percent
stake in Dell, said Dell's special board committee must allow a
final vote to be completed on July 18 as scheduled. He once
again urged shareholders to oppose the buyout.
    "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 the
vote than they would have done on the originally scheduled
election date?" he wrote.
    The stock ended down 1.1 percent on Wednesday at $12.88, its
lowest level since July 5. 
    Michael Dell and Silver Lake have so far resisted calls,
including from Dell's special committee, to raise their $13.65
per share offer.
    Two people familiar with the matter said on Tuesday the
bidders would stick to their offer even if the vote was
postponed. The sources asked not to be identified because they
were not authorized to speak to the media.
    The Wall Street Journal reported on Wednesday that Vanguard
Group Inc, the largest U.S. mutual fund manager and holder of a
3.7 percent stake in Dell, and State Street Corp, which
has a 3.5 percent stake, were set to vote against the buyout.
Vanguard and State Street declined to comment.
    Vanguard and State Street run index funds that typically
follow the lead of shareholder advisory firms. Their decision to
defy all the three major advisory firms that have recommended
the Dell buyout would add to the uncertainty over the vote
outcome.
    Other key minority shareholders, including BlackRock Inc
, T. Rowe Price Group Inc, Highfields Capital
Management, Pzena Investment Management and Yacktman Asset
Management, have already come out against the buyout or have
declined to comment on reports that they are against it.
    Under so-called majority-of-the-minority voting provisions,
a majority of Dell shareholders, excluding Michael Dell's
roughly 16 percent stake in the company, have to vote for the
buyout in order for it go through.
    This means shareholders, other than Michael Dell, who
collectively own almost 43 percent of the Round Rock,
Texas-based company need to vote for the buyout for it to go
through.
    Accounting for the stakes of Icahn and his partner
Southeastern Asset Management Inc, the total against the buyout
approaches 30 percent of Dell's shareholder base.
    
 
    
    To be sure, some shareholders supportive of the deal are
holding their ground, including Invesco Ltd's 
PowerShares line of exchange traded funds, which held a roughly
1 percent stake of Dell according to recent filings.  
    Asked how they would vote, Invesco spokeswoman Kristin
Sadlon said in an e-mail that the funds will vote in accordance
with recommendations by Glass Lewis & Co. Like other proxy
advisors, Glass Lewis has recommended shareholders vote in favor
of the acquisition.
    Dell's special board committee will likely decide by
Thursday morning whether or not to delay the vote, based on the
number of votes that have been cast to block the buyout. Dell's
board has set up the special committee to independently assess
the best option for shareholders, without influence from Michael
Dell, who is the company's chairman and chief executive officer.
    Icahn has argued since March that Dell's founder is trying
to steal the company away from shareholders almost 30 years
after he founded it with just $1,000.
    Icahn and Southeastern announced their latest alternative
offer for Dell last week. It calls for a buyback of up to 1.1
billion shares at $14 apiece and a Dell warrant offered for
every four shares held.
    Each warrant would entitle the holder to buy one Dell share
for $20 each within the next seven years.
    Icahn estimates the value of his latest offer at $15.50 to
$18 per share although Dell's special committee dispute this. 
    In order for his proposal to be put forward for
consideration by Dell shareholders, he must first succeed in
having Michael Dell's offer voted down and then win enough
shareholder support to replace the members of Dell's board with
his own nominees.
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