As the Dell takeover drama unfolds, the major players seem to be following a script.
Michael Dell and his private-equity partner in the deal, Silver Lake, likely will continue their pursuit of the Texas PC maker even after the board refused to change the voting rules to make it easier for them to win shareholder support.
Sources close to the situation believe the Dell founder and CEO will accept the board’s new offer to change the “record date” to allow more recent shareholders to vote on the sweetened $13.75-a-share takeover.
A special board committee rejected a demand from Dell and Silver Lake to drop a rule that counts absentee shares as “no” votes.
Instead, the committee offered to change the record date in exchange for a dime-a-share price bump and delay tomorrow’s shareholder vote until early September — moves that could bolster the chances of the buyout bid succeeding.
“Nothing really bad will happen this week,” said a source close to the buyout team, referring to concerns that Michael Dell might go ahead with a Friday vote that he is likely to lose.
The conventional wisdom is that changing the record date from June 3 to Aug. 10 will improve voter turnout, especially among “arb” traders who have piled into the stock more recently in hopes of profiting from the takeover.
Not surprisingly, Carl Icahn and Southeastern Asset Management, who oppose the buyout and have been critical of the board’s actions, warned the special committee not to change the record date.
If Dell accepts the new offer as expected, sources said that Icahn is likely to file an injunction in Delaware Chancery Court to both stop the controversial change in the record date and force the computer company to hold the annual meeting and the vote on the same day.
By holding the votes the same day, Icahn will put up a slate of directors at the annual meeting who support his $14-a-share recapitalization plan and mute Dell’s argument that he is not offering a real alternative.
In July, Institutional Shareholder Services recommended shareholders take the Dell deal, in part because it was unsure if Icahn could win enough support to follow through on his alternative plan.
If the votes were on the same day, however, ISS might revisit its recommendation, a source said.
Dell held its last annual meeting July 13, 2012, and is supposed to hold its next meeting within 30 days of the one-year anniversary.
Dell shares traded down 1.5 percent to $12.67.