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Dell postpones meeting on buyout as more votes needed

Nadia Damouni and Anna Driver (via AFR) | July 19, 2013
Failure to garner more votes has resulted Dell to postpone a shareholder vote on its chief executive's $US24.4 billion buyout offer to next Wednesday.

Dell Inc postponed a shareholder vote on its chief executive's $US24.4 billion buyout offer to Wednesday next week after failing to get enough support to seal the deal, despite winning over several large investors at the eleventh hour.

The adjournment of the meeting on Thursday in the US, called minutes after shareholders gathered at Dell's headquarters in Texas to decide on what could be the largest buyout since the financial crisis, buys time for co-founder and CEO Michael Dell to persuade naysayers to switch sides.

Complicating matters, billionaire investor Carl Icahn, who has amassed an 8.7 per cent 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 maker.

Investors are divided over Dell's prospects. Some are ready to cash out of a company increasingly vulnerable to a crumbling PC market and already a shadow of an earlier self that led the global market and stood as a model of industry innovation.

Others remain convinced the company founded out of Michael Dell's dorm room in 1984 can transform itself into a dominant provider of business computing services - under his leadership or otherwise.


Vanguard and BlackRock are now on board with the proposal, sources familiar with the matter told Reuters on Thursday.

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.

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 per cent of the company's outstanding stock, one of the investors estimated.

Michael Dell may have to raise his $US13.65-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 $US10 before news of the buyout surfaced.

"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 were up 2.2 per cent to $US13.16 in early afternoon trading, New York time.


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