Dell OKs new plan for shareholder vote on raised offer from Michael Dell

The new shareholder vote is set for Sept. 12

The Special Committee overseeing Dell's buyout proposal has reached an agreement with company founder Michael Dell and his associates, Silver Lake Partners, on a proposed purchase in which shareholders will get US$13.75 per share and a special dividend of $0.13.

After multiple delays, the shareholder vote tally on the revised merger agreement is now set for Sept. 12 at 9:00 a.m. Central Time. As part of the new proposal, shareholders will also get the regular third-quarter dividend of $0.08 per share.

With the new agreement, the PC company's Special Committee and Dell-Silver Lake are now on the same page on the revised offer of $13.75 per share made last week as well as the guidelines to put the proposal to a shareholder vote.

Dell and Silver Lake in February proposed to buy the company for $24.4 billion, or $13.65 per share. That offer was raised to $13.75 per share, and subject to a change in shareholder voting rules proposed by Dell and Silver Lake in which only "yes" or "no" votes would count, with abstentions left out. Initially, voting rules called for abstentions to be counted as "no" votes. The Special Committee, which is reviewing proposals to buy the company, earlier this week rejected the new guidelines, saying any vote should stick to the original rules.

But the revised agreement reached on Friday, which includes the sweetener of a $0.13 special dividend, modifies the voting standard to count only votes that are actually cast.

"In the context of the current decision, 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," said Alex Mandl, chairman of Dell's Special Committee, in a filing with the U.S. Securities and Exchange Commission.

In trying to explain the change in shareholder voting guidelines, Mandl said that the original voting rules were set when the choices were Dell-Silver Lake's proposal or "continuation of the status quo."

But since then, an alternative proposal -- likely a reference to a counterproposal by investors Carl Icahn and his associates, Southeastern Asset Management -- has emerged, and Mandl said the nature of the choice facing shareholders has changed. Icahn and affiliated parties believe their counteroffer is worth up to $18 per share for current shareholders.

"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," Mandl said.

The vote has already been delayed twice, which analysts said was because Michael Dell and Silver Lake failed to find enough shareholder backing for its $24.4 billion buyout proposal. The response to that proposal was mixed. Some shareholders came out against the deal, saying the company was being undervalued, while some advisory services were for the deal, recommending stockholders take the money and run, especially with the PC market in decline.

Icahn has been leading the charge against the Dell-Silver Lake proposal. He filed a lawsuit on Thursday against the PC maker to prevent the company from setting a new date for the meeting at which shareholder votes on the Dell-Silver Lake proposal are to be counted. The suit also demanded that if a new vote date is set, the company's annual meeting "be held on the same date and time, and with the same record date," according to a filing with the U.S. Securities and Exchange Commission.

The new agreement reached on Friday also amends the breakup fee from $450 million to $180 million in case any merger agreement is terminated.

Agam Shah covers PCs, tablets, servers, chips and semiconductors for IDG News Service. Follow Agam on Twitter at @agamsh. Agam's e-mail address is agam_shah@idg.com

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