Judge Junks Icahn Challenge To Dell Deal

Aug 19 2013 | 1:11pm ET

A judge Friday dealt a potentially fatal blow to Carl Icahn's hopes of blocking the sale of Dell Inc. to its founder and a private-equity firm.

Delaware Chancellor Leo Strine rejected Icahn's bid for an expedited hearing on most of his claims against the computer-maker, meaning they will not be heard before the Sept. 12 vote on the $24.8 billion deal, led by Michael Dell and Silver Lake Partners. Icahn had asked the court to overturn Dell's decision earlier this month to change the voting rules for the deal; the changes made, in addition to the extra money offered in exchange, make the buyout's approval all but a certainty.

Icahn himself seemed to realize that he had lost the battle for Dell, telling The New York Times, "I believe I made a competing bid that was superior. I am obviously disappointed that the judge didn't see it that way. But we did get $350 million more from Michael Dell for shareholders. We did the work the board should have done."

Strine did agree to expedite hearing of one of Icahn's claims, an effort to force Dell to hold its annual shareholder's meeting at the same time as a vote on the buyout. But even that was a Pyrrhic victory: Strine said that precedent would force Dell to hold the annual meeting within 30 to 90 days of the 13-month anniversary of its last annual meeting, but "under the relevant federal securities standards, it does not seem at all possible to have a compliant meeting on the time frame that the Icahn group suggests."

Strine noted that Dell has set an annual meeting date, Oct. 17, that falls within the 30-to-90-day period, and that he was inclined to accept it.

But, for the most part, Strine sided strongly with Dell, saying that the board and special committee handling the sale—groups that Icahn has assailed—have done a good job.

"Under our law, deference is due to independent directors," Strine said, adding, "I'm not sure what other leverage they really had." And he said changing the record date—allowing investors who have recently bought shares to vote—was justified by the nearly 25% turnover in Dell shares since the deal was announced.


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