This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Dell Special Committee Refuses to Move LBO Goalposts

NEW YORK ( TheStreet) -- A Dell (DELL) special committee tasked with maintaining fairness in the process of the struggling PC-maker's takeover has refused to alter the shareholder voting process to decide on the leveraged buyout offer from Silver Lake Partners and Michael Dell.

Dell's special committee said Wednesday they would not amend the company's merger agreement with Silver Lake and Michael Dell in return for a 10-cent increase to the takeover consortium's initial offer of $13.65 a share, or $24.4 billion.

The consortium was asking that along with the increased offer, Dell's special committee agree to revise a February 5 merger agreement so absentee votes at the shareholder meeting aren't counted against the takeover consortium.

Given votes already cast by institutional holders such as BlackRock, Vanguard and State Street in favor of the deal, and opposition from T. Rowe Price, Icahn Associates, Southeastern Asset Management, Yacktman Asset Management and Pzena Investments, most of Dell's largest shareholders are spoken for.

To bridge a deficit of support, Dell's takeover consortium needs to appeal to smaller institutional holders and other investors who did not participate in voting ahead of Dell's twice-adjourned shareholder meeting.

The decision may force Silver Lake and Michael Dell to have to return to the bargaining table with a new offer, given a competing self-tender proposal floated to Dell shareholders by billionaire activist investor Carl Icahn.

Still, Dell's special committee did say they are willing to change the record date for the voting process if Silver Lake and Michael Dell offer a $13.75 without asking for a change to the merger agreement.

"The Committee is not prepared to accept your proposal. We are, however, willing to establish a new record date for a vote on a $13.75 per share transaction under the existing voting standard," Dell's special committee said in a letter addressed to Silver Lake and Michael Dell.

It is reported that about 20% of Dell's shareholders were absent the July 18 vote, creating a roadblock for the private equity buyers. Meanwhile, Silver Lake's revised offer of $13.75 a share only increases Dell's buyout price by approximately 0.7%.

A source familiar with the situation said last week Silver Lake's increase was unlikely to turn many "no" votes to the takeover into "yes" votes. Meanwhile, changing the treatment of absentee shareholders could undermine the fairness of Dell's buyout process, which has received strong support from a key Delaware court.

"The integrity of the process is one of the best things the deal has going for it," the source said.

For now, the special committee will adjourn Dell's shareholder vote until 10 a.m. EST on August 2nd.

A lot could happen in the week-long delay, however, there are also signs of a standoff between Silver Lake, Dell's special committee, shareholders and Carl Icahn.

Dell shares were down over 1% in early trading to $12.67, the lowest level since Silver Lake and Michael Dell's takeover was announced.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
DELL $0.00 0.00%
AAPL $110.38 0.00%
FB $92.07 0.00%
GOOG $626.91 0.00%
TSLA $247.57 0.00%


Chart of I:DJI
DOW 16,472.37 +200.36 1.23%
S&P 500 1,951.36 +27.54 1.43%
NASDAQ 4,707.7750 +80.6910 1.74%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs