Michael Dell delayed his date with destiny once. On Wednesday, he will try again.
That’s when the shareholders of Dell Inc. are scheduled to vote on a $24.4-billion (U.S.) deal that would take the computer giant private after 25 years as a publicly-traded company.
Originally set for July 18, the vote was scrapped early that day when it appeared that Mr. Dell and his partner, private-equity firm Silver Lake Partners, might not have the support to win approval for the deal.
Will another week do the trick? Much will depend on large institutional holders of Dell stock – and just how stubborn their opposition is to the transaction.
Some such shareholders have mutinied against the deal, which is offering $13.65 per share. The stock is closed at $13.14 in trading on Friday, but has dropped as low as $8.86 in the past year.
Dell is wrestling with considerable challenges – the disintegration of the personal computer market chief among them – but it remains a profitable company. Some shareholders suspect that Mr. Dell is attempting to buy the company he founded on the cheap. If he were to succeed in overhauling the business, he would stand to reap huge rewards.
Mr. Dell argues that the company needs the kind of drastic makeover that is best accomplished away from the glare of public markets. That transition entails major risks, which he has suggested shareholders might not be willing to stomach. Mr. Dell and Silver Lake have insisted their price for the company is fair and they will not raise it.
Enter Carl Icahn. The billionaire corporate raider joined with another large holder of Dell stock and proposed an alternate transaction – a leveraged recapitalization – which envisions a one-time payout of $14 a share and would keep a chunk of the company traded on public markets.
The Dell board members tasked with evaluating offers for the company have dismissed Mr. Icahn’s proposal, saying it isn’t a superior bid and his financing isn’t sound. But Mr. Icahn is hardly backing down.
In an interview last week with CNBC, he heaped criticism on Dell’s board. “I’ve never seen one as bad as this. I really mean it,” said Mr. Icahn. “They actually go out and they scare their own shareholders.”
Naturally, that’s not how Mr. Dell sees it. “It is my belief that the kind of investments that the company needs to make are not likely to be attractive or well-liked by most public investors,” Mr. Dell told The Globe and Mail in late May. “Clearly there is some amount of challenge and volatility in the sector that we’re in.”