| ROUND ROCK, Texas, July 24
ROUND ROCK, Texas, July 24 Dell Inc
shareholders converge again in Texas on Wednesday to vote on CEO
Michael Dell's $24.4 billion buyout offer, after a previous
meeting was pushed back a week to buy time to convert investors
on the fence about the landmark deal.
A meeting was called last week at Dell's headquarters on the
outskirts of Austin, but adjourned within minutes. The company
founder and partners Silver Lake had failed to secure enough
votes to seal the largest buyout since the financial crisis,
which would end by taking the No. 3 PC maker private.
Complicating matters, activist investor Carl Icahn and major
Dell shareholder Southeastern Asset Management repeatedly argue
that the offer undervalues the company and its growth prospects,
and have offered an alternative deal of their own.
Since then, both camps have redoubled their efforts to
persuade stakeholders to defect to their side.
IF SHAREHOLDERS SAY "YEA"
Longer term, this means Dell will no longer be a public
company and Michael Dell and his private equity partner Silver
Lake will get their chance to turn it around away from public
But since the results are likely to be close, shareholders
opposed to the buyout could exercise their Delaware appraisal
rights, which basically means they are free to appeal to a
Delaware judge to value their shares. The option, however, is
costly and time-consuming with no guarantee a judge would see
things differently from Michael Dell.
Icahn at one point in the past few months threatened "years
of litigation" should he not get his way. He may still resort to
legal means to contest the deal.
IF SHAREHOLDERS SAY "NAY"
This may have a number of implications.
DISRUPTION - There will be continued uncertainty and
disruption within the company. Analysts had warned that
customers will defect because service could worsen during the
struggle to turn the company private or keep it public.
Michael Dell has pledged to remain committed to the company
he founded if his attempt fails.
BATTLE FOR THE BOARD - A pitched battle between Michael Dell
and Icahn over control of the board may emerge. Icahn has
already announced his own slate of board directors, though some
analysts have questioned their credentials and turnaround
Icahn has called for a quick annual shareholders' meeting,
at which investors can vote on nominated directors. He needs his
new board to be elected to be able to put forward, for a vote,
an earlier offer he made in partnership with Southeastern.
Michael Dell is expected to float the current slate of
directors, with a few additions.
HIGHER BID FROM MICHAEL DELL AND SILVER LAKE - Michael Dell,
after months of maintaining that the shares are worth $13.65 a
piece, may decide to bump up the offer to appease disgruntled
shareholders and close the deal. Any bump in the price will
likely have to come from Michael Dell as Silver Lake had
declined to raise its contribution further during late-stage
negotiations leading up to the Feb. 5 buyout agreement.
The Dell founder then agreed to roll over his shares at
$13.36 each to subsidize and finalize the deal at the $13.65
offered to shareholders. The current offer is the sixth one
since discussions started in earnest in October.
However, Michael Dell and Silver Lake have ruled out raising
their offer even if a vote is delayed, said people familiar with
the plan on Tuesday, asking not to be identified because the
deliberations are confidential.