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Dell Board Denies Michael Dell Buyout Vote Rule Change

The special committee delivers Michael Dell a buyout vote blow but offers to postpone the shareholder vote again.

With only days left before the scheduled Aug. 2 vote, the Dell special committee fired off a letter to Michael Dell Wednesday stating: "The Committee is not prepared to accept your proposal. We are, however, willing to establish a new record date for a vote on a $13.75 per share transaction under the existing voting standard."

The special committee's proposal would postpone the shareholder vote set for Aug. 2 only if Michael Dell upped his buyout offer to $13.75 -- no strings attached. The special committee said in its letter to CEO Dell this would give "shareholders more time to reflect on where their best interests lie in light of the improved offer." The committee did not specify a new vote date.

If Michael Dell declines the special committee's offer, the vote is set for Aug. 2 at 9 a.m. (CT).

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Dell channel partners were disappointed to hear the news. "It's high-stakes poker and it doesn't appear Michael has got the best hand right now," said Ron Dupler, CEO of GreenPages, a Kittery, Maine-based Dell partner. "I think everyone in the Dell community would be disappointed if Michael Dell doesn't prevail."

In their bid to take Dell private, last week CEO Dell and investment partner Silver Lake promised to boost their buyout price from $13.65 to $13.75, subject to a change in the way shareholder votes would be counted. Michael Dell didn't want shareholder absentee votes counted as "no" votes.

If Michael Dell got his way it could have given him an important edge over a counteroffer by activist investor Carl Icahn, who is fighting Dell's privatization bid. As of last week there were an estimated 23 percent of unaffiliated votes outstanding that would have been counted as "no" votes.

Previous statements by Michael Dell and his investment partners indicate that they are not willing to increase their buyout price without a change in the voting rules. Michael Dell called his previous proposal his "best and final offer," adding that "$13.75 per share represents an additional $150 million to the unaffiliated shareholders, which I think is substantial."


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