Shareholders Will Probably Approve Dell’s Go-Private Plan Tomorrow
2013 at 1:29 pm PT
Barring a significant surprise, by this time tomorrow
the computing company Dell will be on its way to becoming a privately held
At a special meeting of
shareholders to be held at the company’s headquarters in Round Rock, Texas,
the votes on its leveraged buyout will be tallied up. All indications
suggest that there is a sufficient majority of yes votes; Bloomberg News
reported today that the vote
appears to be sewn up in favor of the Dell-Silver Lake proposal.
The meeting will probably
be gaveled to adjournment right after the vote’s result is read. But that
won’t end the potential for further drama in this year-long buyout saga.
Even though Carl Icahn —
the activist investor who fought the deal for most of the year —
has bowed out of any further effort to try and wrest control of the
company away from Michael Dell, that doesn’t mean the fight is entirely
Remember that Icahn has
promised to seek appraisal rights in the the Delaware courts. He has been
talking about this since mid-July. Icahn, and presumably other
shareholders who agree with him, would abstain from voting on the buyout
under this scenario, and then take advantage of a provision in Delaware
corporate law — Dell is incorporated in that state — to ask a judge to
determine exactly what the company is worth.
York Times reported today, some analysis by experts in this type of case
says that Icahn and his supporters have a pretty good chance of squeezing
more money out of Michael Dell and Silver Lake.
The analysis comes from
the law firm of Fish & Richardson in Boston, and you can
read it in full here. The firm looked at 20 years’ worth of decisions in
these types of cases before the Delaware Chancery Court and found that most
of the time — in 37 cases out of 45 that went to trial — judges ruled that
the company was worth more than the buyer was offering.
As the firm’s lawyers put
it: “Indeed, opinions from the Delaware Chancery Court show that there has
not been a single case during the past twenty years in which any kind of a
standalone buyout, management or otherwise, was appraised at a ‘fair value’
that was less than the offer price.”
In eight of those cases,
the court set a valuation that was lower than the price offered — none of
these were straight buyouts, but mergers in which the target was being
absorbed into another company.
This means that, given the
historical patterns of the Delaware courts, there’s a pretty good chance
that Icahn and other shareholders who have opposed the $13.75 a share
offered will get a boost of some kind. Whether or not this will affect the
prospects of completing the deal in the end is as yet unclear.
Assuming the case even
makes it to trial, which it may not. Sources familiar with the thinking of
people in the Dell-Silver Lake camp tell me that they are “not losing sleep”
over Icahn’s maneuvering. And so far, Icahn hasn’t had much luck in the
Delaware courts in regard to his efforts to scotch the Dell buyout. Last
month a judge there
denied his petition seeking to intervene and stop the buyout vote that
is scheduled for tomorrow.