Carl Icahn is pressing forward with his lawsuit against Dell Inc. in an effort to sink the all-but-certain approval of its $24.6 billion buyout.
Icahn last week sued Dell to prevent the company from changing the voting standard on the proposed deal with Michael Dell and private-equity firm Silver Lake Partners. Days later, Dell did just that after Michael Dell agreed to increase the effective price he'd pay for the company to $13.88 per share, up from $13.65.
But Icahn isn't only trying to undo that agreement: He also wants to force Dell to hold its annual meeting, preferably before the Dell-Silver Lake deal goes to a vote on Sept. 12. Icahn hopes to unseat Dell's board at the annual meeting to impose his own $14 per share stock buyback program, but won't get the chance if the buyout is approved, as Dell has scheduled the annual meeting for Oct. 17.
But that's not just too late for Icahn—it's too late under the law. Icahn's lawsuit notes that Dell is in violation of Delaware corporate law requiring that an annual meeting be held within 13 months of the previous meeting, which took place last July.
Delaware law allows a shareholder to go to court seeking to force an annual meeting if the deadline passes, although there is no guarantee the court will actually force one—and even if it did, whether it would be able to do so before the vote on the buyout.
"The directors have attempted to guarantee the success of Mr. Dell's merger over the opposition of the stockholders and the commands of Delaware law," Icahn's filing reads. "There is nothing in Delaware statutory or case law that supports the board's view of its role or the actions it has taken here."
“The first question before the court on the merits is whether our law will allow these directors to act as Platonic guardians, repeatedly refusing to take no for an answer on the merger, stacking the cards in its favor and deliberately postponing the annual meeting until over 60 days after it is required to be held in order to avoid giving the stockholders the opportunity to decide for themselves which transaction they want.”