Dell vote delayed on sweetened offer by founder
Voting on a proposal to take computer-maker Dell private was delayed for a third time Friday after founder Michael Dell agreed to boost the price of the transaction.
The takeover proposal accepted Friday by Dell's special committee ensures shareholders at least $350 million more, according to a Dell statement, and changes the vote-counting system to improve the chances of shareholder approval.
The amended deal from the Michael Dell-led consortium raises the purchase price from $13.65 per share to $13.75, provides for a special dividend of 13 cents and guarantees that the third-quarter dividend of 8 cents will be paid at or before closing.
The voting system will be changed from one in which non-voting shares were counted as "no" votes to one in which only those ballots which are submitted will be counted.
The previous system had put the Michael Dell-led consortium at a disadvantage.
"We believe modifying the voting standard is in the best interests of Dell shareholders, both because it has enabled us to secure substantial additional value and because it provides a level playing field for the decision facing shareholders," said Alex Mandl, chairman of the Dell special committee.
Mandl said the modified vote-counting system made sense in light of an "alternative" proposal from other Dell shareholders, a reference to a deal offered by Carl Icahn, a strong critic of Michael Dell.
Given that backdrop, the "committee does not believe it is appropriate to count shares that have not been voted as having been voted in support of any particular alternative," Mandl said.
The committee also postponed the vote for a third time, to September 12, giving "abundant" notice to shareholders, Mandl said.
"We urge all shareholders to support this transaction."
Dell shares gained 5.3 percent to $13.64 at mid-morning.
Friday's deal marks the latest twist in an increasingly acrimonious battle for control of Dell, an iconic personal computer firm that is struggling to navigate the shift towards mobile technology.
The Dell consortium includes private equity firm Silver Lake Partners.
Michael Dell, who founded the company from his college dorm room, believes moving it out of the glare of public markets and quarterly-reporting deadlines is the best hope for the firm's long-term survival.
Icahn, who has led the opposition to Michael Dell, filed suit Thursday to block Dell from changing the terms for shareholder voting and accused the Dell board of breaching its fiduciary duty.
Icahn has proposed an alternate plan that would pay $14 per share for up to 71 percent of Dell stock, and recently sweetened the deal by adding one warrant for every four Dell shares, entitling the holder to one share of Dell at $20.
Earlier this week, the Dell special committee rejected a proposal from the Michael Dell consortium that modified the vote-counting system and included terms that were more generous than the original offer, but not as robust as Friday's deal.
The committee did not elaborate on its reasons for rejecting the prior deal.
Dell postponed the vote twice last month, fearing insufficient shareholder support.
A recent survey showed worldwide sales of personal computers fell for a fifth consecutive quarter in the April-June period.