Michael Dell Inc (NASDAQ:DELL) in deeper dell
The hurdles never seem to end for Michael Dell. On Wednesday, Michael Dell Inc (NASDAQ:DELL)’s special committee rejected the founder and Silver Lake Management’s request to bend the voting rules in lieu of an additional $150M. Michael Dell and Silver Lake had put forth a $24.4B to take the company private. The company’s shares dropped to a low of $12.66 at Wednesday’s close. This has been almost their lowest levels since the time the takeover news became public on 14 January.
This is a definite indicator of the uncertainty that investors are harboring about the prospect of the deal. Michael Dell had founded the company in 1984 and has been altercating since February that the company has to be restructured as a private entity. In his opinion, this is the only way to deal with the travails that it is going through due to stiff competition from tablets and smartphones.
On Wednesday, the special committee that had been setup by the company’s board refused to alter the rules for Michael Dell. However, they displayed a little leniency and said that they would defer the record date for the vote.
To no avail?
People in the know are saying that Michael Dell and Silver Lake are almost certain that their deal will crumple unless some change is made to the manner in which voters are counted. At the moment, the buyout has to be approved by a major percentage of shareholders. This excludes the 15.7% stake that Dell and his partners hold. Last week, the buyout offer was raised by 10 cents/share.
The condition was that the deal should go through if it is approved by a majority of the shares that actually get voted. Two adjournments later, there was no doubt about the fact that Dell and his group did not have the backing of a sufficient number of votes.