Dell falls short – vote on buyout postponed as more voters needed

19 Jul 2013

Michael Dell, founder and CEO of Dell

Michael Dell’s US$24.4bn Dell buyout attempt has floundered on the first lap and the crucial vote on the company’s future has been postponed in an attempt to win more voters to his side.

In February, Dell revealed it plans to go private under a US$24.4bn transaction by founder Michael Dell and global tech investment firm Silver Lake and involving loans and financing from Microsoft and major investment banks.

However, billionaire investor and famed corporate raider Carl Icahn entered the fray, amassing 8.7pc of Dell stock and has won stockholders over to his side using the argument that Michael Dell’s proposed deal – which offers a 37pc premium at US$13.65 a share – undervalues Dell, the third largest computer maker on the planet.

Together with Southeastern Asset Management, Icahn’s side now holds close to 14pc of Dell.

Yesterday, the crucial vote fell short of enough votes to conclude the deal despite winning backing from several large investors at the last minute. It is understood that Dell and Silver Lake fell short by 100m shares from the 735m shares they need in order for the buyout to pass.

The vote has been adjourned until Wednesday to buy time for Michael Dell to win more support.

Both the Dell camp and the Icahn camp have been canvassing shareholders who are divided on the future of the computer maker.

The future of a technology juggernaut is at stake and much of it depends on sentiment.

On the one hand, the PC market is in decline with devices like smartphones and tablet devices reigning. But on the other hand, Dell’s contribution to the burgeoning cloud and server market in terms of hardware, infrastructure and software signals a bright future for the company.

Its destiny, it seems, is now in the hands of the moneymen.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years