The game of chicken over Dell lives on

July 18, 2013
July 18, 2013

Alas, the saga over PC maker Dell is destined to go on for at least another week. The shareholder vote on the proposal to take Dell private was scheduled for today, but now it’s postponed until July 24. So get ready for another few days of posturing, changing votes and Carl Icahn-style saber rattling.

Dell has been in limbo ever since CEO Michael Dell, private equity firm Silver Lake and Microsoft proposed acquiring the company for $13.65 a share in February. Some of Dell’s other shareholders, including activist investor Icahn and Southeastern Asset Management, opposed the deal, demanding a higher price. Icahn and Southeastern have been fighting the Michael Dell deal with their own proposal for a dividend and recapitalization of the company.

Dell got a number of yes votes at today’s meeting, but the vote was close and the company likely didn’t get enough for approval for the deal. The postponement allows the buyers time to lobby for more yes votes, which is important because investors who don’t submit a ballot are consider no votes.

The good news for Michael Dell is that some of the investors that were supposedly against the proposal, like BlackRock, actually voted in favor of the Michael Dell buyout. The bad news is they can change their minds again because the vote has been delayed.

Interestingly, the Michael Dell group has not yet declared its proposal to be “best and final,” a label that would indicate that it won’t raise its bid. That leaves open the possibility that the Michael Dell group could raise its bid, although it has said it won’t. One reason for raising it would be if there is another credible, opposing bid—which there may not be, since the Icahn proposal comes with risks.

So, the Michael Dell group will probably wait until just before the July 24 vote to see if it wants to make a move or stand firm on its bid. It all depends on how the lobbying for shareholder votes goes over the next few days. And as today has shown, it’s not over until it’s over.

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