* Shareholder vote postponed to Wednesday
* Meeting adjourned minutes after being called
* Dell needs 100 mln more votes to pass buyout -source
By Nadia Damouni and Anna Driver
NEW YORK/ROUND ROCK, Texas, July 18 Dell Inc
on Thursday postponed a shareholder vote on CEO Michael
Dell's $24.4 billion buyout offer, after he won 11th-hour
backing from several large investors but still fell short of
enough votes to seal the deal.
The meeting was called and then adjourned minutes later,
after shareholders gathered at Dell's headquarters in Texas.
Postponement of the vote until Wednesday buys time for Dell, the
company's co-founder and chief executive, to win over naysayers
for a deal that could be the largest buyout since the financial
Complicating matters, billionaire investor Carl Icahn, who
has amassed an 8.7 percent stake in Dell, is leading a charge
with major shareholder Southeastern Asset Management against the
buyout with an offer of his own. He and others say Michael
Dell's deal undervalues the world's No. 3 personal computer
Investors are divided over Dell's prospects. Some are ready
to cash out of a company increasingly vulnerable to a crumbling
PC market. Dell has become a shadow of the company founded out
of Michael Dell's dorm room in 1984, which rapidly grew into a
leader in the global market and a model of innovation.
Others remain convinced the company can transform itself
into a dominant provider of business computing services, under
Dell's leadership or otherwise.
In the week leading up to Thursday's meeting, Icahn's team
and Dell's special board committee, which supports the CEO's
offer, flooded shareholders with letters and documents to argue
Vanguard and BlackRock Inc are now on board with the
proposal, sources familiar with the matter told Reuters on
Still, they said Michael Dell and private equity partner
Silver Lake fell about 100 million shares short of the 735
million that they need for the buyout to pass.
A large chunk of non-votes - which count as "nays" - from
mainly retail investors, helped account for the shortfall,
several investors told Reuters.
Only 77 percent of eligible shares were voted as of
Thursday, the Wall Street Journal cited people familiar with the
matter as saying. Dell declined to comment on that ratio, which
suggests a high number of abstentions.
Some arbitrage investment funds may also hold out hope that
Michael Dell will bump up his offer price, they added on
condition of anonymity. Arbitrageurs, who typically make
short-term bets around the outcomes of deals and other major
transactions, own roughly 350 million shares or 20 percent of
the company's outstanding stock, one of the investors estimated.
Michael Dell may have to raise his $13.65-a-share offer to
secure the deal, analysts and investors say. But other sources
have said he and Silver Lake remain reluctant to pay more for a
company that traded at about $10 before news of the buyout
"The delayed vote may speak to the Silver Lake/Dell
transaction not finding necessary support," said Topeka Capital
Markets analyst Brian White. "A higher bid may be necessary to
consummate this transaction."
Dell shares closed up 24 cents, or 1.9 percent, on Thursday,
at $13.12 on the Nasdaq.
It is unusual for corporations to adjourn shareholder
meetings on such short notice, but governance experts say it can
be done if the company bylaws allow it.
Over the next week, the board will encourage the apparently
large number of shareholders that had not cast votes to support
the deal, said mergers expert Brian Quinn, an associate
professor at Boston College Law School.
"To encourage these votes to come out, they will likely also
try to re-engage Silver Lake to seek out a higher price," he
Icahn was quick call the adjournment "unfortunate" and
reiterate that he found Dell's offer too low.
"This delay reflects the unhappiness of Dell stockholders
with the Michael Dell-Silver Lake offer, which we believe
substantially undervalues the company," he said in a statement
issued with Southeastern. "This is not the time for delay but
the time to move Dell forward."
Vanguard and BlackRock had previously opposed the deal, but
ultimately switched sides, a source said, requesting anonymity
because the matter is not public.
Other investors previously seen as swing votes, such as
State Street Corp, Bank of New York Mellon Corp
and Invesco also voted in favor of the deal on the eve of the
shareholders' meeting, the source said.
T. Rowe Price Group Inc, Highfields Capital
Management, Pzena Investment Management and Yacktman Asset
Management have previously voiced opposition to the deal. T.
Rowe Price, which owns roughly 4 percent of Dell's stock,
reiterated its opposition on Thursday to the deal.
State Street declined to comment. Vanguard declined to
comment. Representatives of the investment firms did not respond
to requests for comment.
Board member Alex Mandl, chairman of the special committee
overseeing the buyout, set the new meeting date for Wednesday.
Under so-called majority-of-the-minority voting provisions,
a majority of shares, excluding Michael Dell's roughly 16
percent stake, must be voted in favor for the buyout to go
Shareholder Ed Benson from San Antonio, one of the many
retail investors that account for an estimated 10 to 15 percent
of shares in the company, turned up in Round Rock on Thursday
but had expected the meeting to be adjourned.
"It's very hard to acquire that many votes," said Benson,
who supports the buyout proposal.
But travel agent Linda Bush, who commuted to the meeting
from the area, disagrees.
"The majority of people I talked to didn't vote for it," she
said. "We need to be paid more".