A corporate judge Aug. 16 denied a request by billionaire investor Carl Icahn to expedite his lawsuit challenging Michael Dell's effort to take his own company private.
The lawsuit sought to prevent changing the conditions of CEO Dell's current $24.4 billion bid ($13.75 per share) to buy the company.
Dell's proposal of $13.75 goes into effect only if the special committee appointed by the Dell board governing the negotiation process agreed to change the voting rules that said that any share not voted automatically would go into the "no" column. The committee has amended the rules.
Michael Dell had argued that with as many as 25 percent of the shares not having been voted and counted as "no" votes, the result could be that a minority of shareholders could block the deal even if most votes were cast for it.
Because Icahn's lawsuit hearing now cannot be held before Sept. 12, nothing stands in the way of a shareholder vote set for that day on the buyout offer from Dell and private-equity firm Silver Lake Partners.
"If Mr. Icahn wants to beat Mr. Dell and Silver Lake head-to-head," Delaware Court of Chancery Judge Leo Strine said in his ruling, "he has to top their bid."
Michael Dell needs about 42 percent of the shares to be in support of his bid to be successful. Icahn, who has been leading the effort to defeat the proposal and pushing to have his own bid for the world’s third-largest PC maker approved, and other shareholders who oppose the deal reportedly make up about 20 percent of the outstanding shares.
In his lawsuit, Icahn claimed that the company and the board of directors wronged its shareholders by accepting an undervalued offer from Dell and Silver Lake.
Icahn had wanted the company to hold its annual general meeting, where he intends to try to replace the entire board, at the same time as the vote, hoping to force Michael Dell to put his best and final offer on the table.
Dell founded the company in his University of Texas dorm room in 1984 and has been CEO or a key board member ever since.
Icahn is currently the second-largest shareholder after Michael Dell himself, according to a filing with the Securities and Exchange Commission Aug. 5. The New York-based investor bought 4 million shares of Dell stock on Aug. 1, giving him 8.9 percent of the company--which adds up to about 156.6 million shares.
Interestingly, Icahn bought the stock a day before shareholders were scheduled to vote on a $24.4 billion offer from Michael Dell and Silver Lake.
The vote eventually was postponed a third time after the CEO and Silver Lake increased their offer and the special committee agreed to change shareholder voting rules, a move that should make it easier for the Dell/Silver Lake proposal to pass.
Icahn, 77, seems to relish controversy. In 2008, as an owner of $1 billion in Yahoo stock, he became enmeshed in trying to depose CEO and co-founder Jerry Yang; he ended up settling with the company and selling his shares. Yang stepped down a few months later on his own terms.
Icahn also has had similar tussles with management and boards running Biogen and Transocean Ltd.
eWEEK Senior Editor Jeff Burt contributed to this story.