Dell Privatization Deal Looks Unlikely

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Dell probably won’t be going private after all. A special committee has rejected a plan to change voting rules in exchange for a higher buyout offer from Michael Dell and Silver Lake, and it doesn’t appear that the privatization bid will get enough votes to pass under the old rules.

All Things D’s Arik Hesseldahl reported, “The proposed leveraged buyout of the computing company Dell appeared close to a collapse today after the special committee of the company’s board of directors rejected a revised offer that Michael Dell and the private equity firm Silver Lake made to buy out the company last week.”

Andrew Bary with Barron’s noted, “The special committee did offer to set a new record date for the vote if Michael Dell is willing to proceed with his revised offer of $13.75 a share. That $13.75 offer from Michael Dell and Silver Lake Partners unveiled earlier this month had been contingent on the voting rule change, which would eliminate nonvoting shares from the tally. Nonvoting shares count as a no vote. An estimated 20% of Dell holders haven’t voted.”

Bloomberg’s Serena Saitto and Aaron Ricadela wrote, “Michael Dell and Silver Lake Management LLC are unlikely to stick with a sweetened bid of $13.75 a share for Dell Inc. (DELL) after the board committee refused to change the rules to make it easier for them to win shareholder support, said a person with knowledge of the matter. While the committee is willing to change the record date to let more recent shareholders vote on the proposal, the buyout group doesn’t anticipate that this alone will be enough for them to win approval for their transaction, said the person, who asked not to be named because the deliberations are private.”

Greg Roumeliotis with Reuters added, “A person familiar with the matter later said Dell’s chief executive and Silver Lake expect their deal to collapse unless there is a change in how shareholder votes are counted.”