On the eve of a shareholder vote that will determine the future of his namesake company, Dell CEO Michael Dell appears to have the wind at his back.
On Sept. 9, activist investor Carl Icahn gave up his long-shot bid to detail Michael Dell’s $25 billion proposal to buy the world’s third-largest PC maker and take it private, though not without taking a few swipes at the CEO and the company’s board on the way out.
And now reports based on anonymous sources are coming out saying that Michael Dell appears to have the necessary shareholder support for his bid to be approved when the numbers are made public Sept. 12. According to a Bloomberg News report citing an anonymous source, investors who hold about two-thirds of the voting shares are supporting the deal.
It’s a significant change from only two months ago, when Icahn and other major investors were aggressively pushing back at the transaction, saying that it undervalued the company, and the shareholder vote had to be postponed three times over concerns that the CEO and financial backer Silver Lake Partners did not have enough shareholder support to approve it.
Those concerns appear to be in the past.
Michael Dell and the special committee appointed by the company’s board of directors to negotiate the deal announced in February a $13.65-per-share bid to buy the company and take it public. Almost immediately the proposal came under fire from shareholders who felt the $24 billion-plus offer was too low.
Icahn subsequently brought his voice into the mix, becoming Michael Dell’s lead antagonist and sharply criticizing the CEO and the board over not only the bid itself, but how the board was conducting the process. Icahn and another investor, Southeastern Asset Management, had proposed a counter-offer that included buying up to 1.1 billion shares at $14 each and keeping the company public. The special committee declined to declare that bid superior to Michael Dell’s.
Scheduled shareholder votes in July and August were delayed amid fears that the CEO would come up short in getting the necessary support to pass the transaction, which would represent the largest leveraged buyout since before the recession hit in 2008. Eventually Michael Dell raised his bid to $13.88 per share in exchange for changes in the voting rules that made it easier for him to get the necessary number of shareholder votes.