Summary:

Dell’s special board committee agreed to consider a sweetened offer for the company and postpone the shareholder vote on it but don’t expect Carl Icahn to simmer down.

Michael Dell
photo: Dell

Hewlett-Packard must be loving this. The special Dell board committee evaluating an offer to take Dell private has agreed to consider a sweetened $13.65-per-share price and postponed the shareholder vote again till September 12.

Company founder, CEO and Chairman Michael Dell and Silver Lake Partners upped the bid and offered a dividend provided the committee agreed to change rules of the vote so that abstaining votes are not counted as no votes.

Per the Dell web site  the board has considered the revised deal, which:

  • Increases the purchase price to $13.75 per share from $13.65 per share
  • Provides for payment of a special dividend at or before closing of $0.13 per share
  • Guarantees that the third quarter dividend of $0.08 per share will be paid at or before closing

The special vote was to have taken place today and has already been postponed twice. As a result of today’s move, the record date was moved back from June 3 to August 13 and shareholders as of that date can vote for or against the Dell-Silver Lake proposal. The most vociferous opponent to the bid, Carl Icahn, has already sued to prevent a change to the recording date.

Icahn maintains the company should not be able to set a new record date. He would prefer to hash all this out at the annual meeting, where he would try to push to replace Dell’s board and then replace Michael Dell as chairman and CEO.

The revised bid may make it easier for the deal to pass muster, according to Wells Fargo analyst Maynard Um. Icahn, T. Rowe Price and other investors have slammed this offer as way too low. Icahn would like the company to stay public.

In any case, the longer this situation takes to play out, the more uncertainty grows and HP, which faces more than its own share of problems, has not been shy in about pointing out Dell’s issues to customers. The Wall Street Journal recently credited the weak yen, issues at IBM — which reportedly tried and failed to sell off its server business to Lenovo — and Dell’s “feisty” shareholders as factors easing pressure on HP, which is trying to execute what CEO Meg Whitman has called a “multi-year turnaround.”

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