Dell Deal On The Brink After Board Rejects Vote-Change Plan

Jul 31 2013 | 11:00am ET

Michael Dell and Silver Lake Partners' bid to purchase the computermaker he founded three decades ago was dealt a crippling blow by the special committee of Dell Inc.'s board overseeing the sale.

The committee refused to accept Dell and Silver Lake's offer of an extra 10 cents per share in exchange for changing the voting rules to make winning approval of the deal easier. Instead, the committee said it would agree to move the voting deadline to the middle of September in exchange for the extra money.

Dell and the private-equity firm have until the current voting deadline, Friday, to accept the committee's offer. Otherwise, the vote will proceed and will almost certainly result in the $24.4 billion deal's rejection.

When making their latest offer last week, Dell and Silver Lake made clear it was their best and final one, and it appears unlikely they will accept the special committee's counteroffer. The committee reportedly said it would not consider changing the voting rules for less than $14 per share, which is what deal opponent Carl Icahn would offer in a buyback plan if he is able to wrest control of the company.

Under the current rules, shares that are not voted are counted as "no" votes. Dell has called that provision unfair, and notes that it would allow only 23% of outstanding shares to block the deal. Most recent vote tallies show that about 579 million shares have been voted in favor of the deal to 563 million against—but the remaining outstanding shares would sink the deal if they are not voted.

The special committee's offer would also change the record date—the date by which shareholders have to have held their stake in order to vote—from June 3 to about Aug. 10. But that change is seen as unlikely to do enough to get the deal over the hump.

The voting deadline for the deal has already been changed twice.

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