Dell special committee denies voting rules change

Silver Lake and Michael Dell aren't budging on their latest proposal -- they increased their bid for the tech-giant in exchange for revised voting rules for shareholders last week.

The Special Committee of the Board of Dell has rejected a proposed change to shareholder voting rules that would have made it easier for Silver Lake Partners and Michael Dell to gain approval of their buyout offer of $13.75. 

Instead, the special committee indicated it was willing to change the record date for the shareholder vote that would include more recent shareholders. The new date will include shareholders who bought shares after 3 June to vote on the transaction, thus increasing turnout, a letter signed by Dell’s presiding director Alex Mandl, said. The special committee would accept the $13.75 per share offer with the new record date.  

Alternatively, a vote on Silver Lake’s and Michael Dell’s original proposal is set to go on Friday—a date that was chosen last week after earlier shareholder meetings had been postponed. 

Silver Lake is unwilling to budge, so the vote will presumably go on Friday based on the firm's earlier offer of $13.65, a source familiar with the matter told Private Equity International. Changing the record date wouldn't change voter turnout enough, the source added. 

Last week, Silver Lake and Michael Dell proposed raising their offer price for the acquisition of the PC Maker from $13.65 to $13.75, if the special committee agreed to discount non-voting shares from the vote all together, as opposed to counting the non-voting shares as opposition votes.  

Michael Dell's proposal was denied

Dell shareholder Carl Icahn and his affiliates from Southeastern Asset Management, which as of 12 July have made five different bids for the company, wrote a letter to the special committee on Monday questioning the voting changes. “Is it really OK to change a material fact on which those buyers and sellers relied for a token increase in merger consideration? Is there any price at which this can be done properly? We think not,” Icahn wrote. He continued to call the existing voting regulations “the only safeguard for shareholders”, in the merger agreement. 

“We view this as a cynical attempt to circumvent the process”, Icahn wrote. “We strongly believe that you should stop postponing the vote on that transaction and allow the vote to proceed toward its proper conclusion on August 2”.