By Poornima Gupta
Aug 1 Activist investor Carl Icahn sued Dell Inc
and its board on Thursday, his latest attempt to derail
a $24.4 billion buyout bid by the computer maker's founder and
CEO Michael Dell.
Icahn asked a court to block rule changes Michael Dell has
proposed ahead of a shareholder vote set for Friday. Icahn and
his affiliates also want the court to stop Dell from changing
the record date by which shareholders must have purchased their
shares in order to vote.
They want to stop Michael Dell from voting any Dell shares
acquired since Feb. 5 at any annual shareholder meeting. The
Feb. 5 date was when his buyout bid was announced. The lawsuit
also seeks the court to bar the company from changing any
shareholder voting requirements.
The lawsuit, filed in the Court of Chancery of Delaware,
seeks to force the company to call an annual shareholder meeting
on the same day as the special meeting on the buyout in case
Dell Inc sets a new record date.
"My personal reaction, bombastic," said Larry Hamermesh, a
professor at the Widener University School of Law in Wilmington,
Delaware, referring to the lawsuit. "The linchpin of it seems to
be that it's inappropriate to move or create a new record date
because that takes advantage of a cynical effort to put shares
in the hands of arbitrageurs who will want to vote for the
Hamermesh pointed out that the judge who is likely to take
this case, Leo Strine, often made the point in the takeover
battle by industrial gases companies Air Products of rival
Airgas that arbitrageurs are shareholders with the same rights.
Icahn, who views Michael Dell's offer as too low, has
amassed an 8.7 percent stake in Dell and is leading a charge
with Southeastern Asset Management against the buyout with an
offer of his own. He has been campaigning to get Dell to set a
date for the annual shareholder meeting so he can put up his own
slate of directors for the company.
A spokesman for Dell Inc declined to comment on the suit but
said Dell board has always sought to act in accordance with its
"Tenuous" talks between the buyout group and Dell's special
board committee for a higher bid are continuing and they're
"making progress," CNBC said on Thursday.
The debate over the go-private transaction has dragged on
for months, jeopardizing the future of the computer maker facing
a decline in its core business of personal computers amid the
growing popularity of tablets. Michael Dell has said a
turnaround of Dell should be done away from the scrutiny of
THIRD ATTEMPT AT VOTE
A vote on the buyout, which has been postponed twice, is now
scheduled for Friday and sources familiar with the matter have
said another adjournment is unlikely.
The special committee has said it would put the original
buyout offer of $13.65 per share up for a shareholder vote.
Dell's special board committee rejected new voting terms in
a revised bid by Michael Dell and Silver Lake, which raised
their offer price last week by 10 cents to $13.75 per share on
the condition the voting rules were changed.
Currently, shareholders who abstain are counted as voting
against the deal, but the buyout group wanted those investors to
be excluded from the tally.
Michael Dell's unusual demand sparked outrage among major
investors, but the buyout group had said about 27 percent of the
unaffiliated shares had not yet been voted and the presumption
that these shares should be treated as if they had voted against
the transaction was unfair.
The votes that have come in so far are split evenly between
yes and no, sources have said, but there appears to be some
signs that Michael Dell could get more votes.
Some of Dell's largest investors, who have abstained from
voting on the buyout, told the company's board this week that
they would back the deal at the buyout group's latest offer
price, three sources close to the matter have told Reuters.
Dell's shares closed up 2.3 percent at $12.96 on the Nasdaq.