Buzz is increasing over the possible Dell buyout as the shareholders near tomorrow’s vote on the matter. Initially proposed back in May, Michael Dell’s offer to buyout Dell and take the company private is being met with as much opposition as it is support. The deal offers to buy shares back at $13.65 per share, which Carl Icahn, the company’s most vocally opposed shareholder, feels greatly undervalues the company. After struggling to keep up in a culture that continues to shift from traditional PC’s to tablet and mobile devices, Michael Dell argues that it will be easier to reinvigorate the company without the scrutiny of shareholders, rather than risk a further drop on Dell stock prices (a special committee for Dell predict that stock prices could drop as low as $5.85 per share if the buyout is rejected).

Dell’s stock is up 31% for the year so far, but has not reached the $20-a-share mark since September of 2008. Still Icahn, the second-largest shareholder behind Michael Dell, feels that shareholders should be receiving more than Michael Dell and private-equity firm Silver Lake Partners are currently offering. In an open letter to shareholders this week, he called Dell’s proposal a “scare tactic” and responded with a proposal of his own. Icahn’s counteroffer suggests that the company buy back 1.1 billion shares at $14 apiece and offer warrants that give shareholders the opportunity to purchase additional shares of Dell for $20 each over time. While there are a handful of other shareholders that have openly opposed Michael Dell’s proposal, Carl Icahn has been the most vocal and proactive since its incept. A Dell representative commented on Friday that they “have been and remain willing to meet or talk with Mr. Icahn about his various proposals, including at a meeting scheduled earlier which he requested and subsequently cancelled”.

It remains unclear as of yet which direction shareholders are being swayed in. Last week, shareholder advisory groups Institutional Shareholder Services Inc, Glass Lewis & Co and Edgar Jones Proxy Services all recommended to Dell stockholders that they vote for the buyout being proposed by Dell. When the deal initially hit the table in May, Dell’s board recommended the same. Representatives familiar with the matter have said that Michael Dell will not raise his $24.4 billion bid, even if tomorrow’s scheduled vote is delayed; Mr. Icahn’s proposal will not go to vote at all unless he can win the shareholder support to vote down Michael Dell’s proposal first.

 

Sources:

BBC News, Forbes, NASDAQ, The Telegraph, Reuters