The Dell Inc. (NASDAQ:DELL) buyout battle has reached a new phase where the computer maker and the group of buyers led by Michael Dell will directly negotiate the deal with shareholders, people familiar with the matter told the Wall Street Journal. Dell Inc. (NASDAQ:DELL) shareholders have already been bombarded with arguments in favor for and against the $24.4 billion deal proposed by the company founder Michael Dell and private equity firm Silver Lake Partners.
People familiar with the developments reported that the computer maker and its potential suitors are gearing up to contact the shareholders directly, and persuade them to vote in favor of the deal under which they will have to sell their stake for $13.65 per share. Many long-term shareholders have already announced to vote against the deal. Wall Street Journal said that the final outcome will depend on how individual shareholders and hedge funds end up voting.
The lobbying process will start as soon as the SEC approves the final version of the offer, which provides details of the deal and financial rationale of the special committee that approved it. After the SEC approval, Dell Inc. (NASDAQ:DELL) will file a final proxy and schedule the shareholders’ voting date on the Michael Dell-Silver Lake offer. These people said that the potential buyers are likely to set a July date for voting.
The potential buyers and Dell Inc. (NASDAQ:DELL)’s special committee are not the only ones to call shareholders. Billionaire investor Carl Icahn and Southeastern Asset Management will entice shareholders to vote against the deal with Michael Dell and Silver Lake Partners. Icahn and Southeastern have been long-time shareholders who currently sit on a loss on their investments in the computer maker. Icahn has reiterated that Michael Dell’s offer undervalues the stock and deprives shareholders of any future upside in the company.
Dell Hires Proxy Solicitor Firms
Usually, members of the potential buyout group or independent board members contact large shareholders in a proxy contest. But the parties have decided to hire proxy solicitor firms to negotiate the deal with mutual funds, hedge funds and individual investors. The head of Dell special committee, Alex Mandl will also participate in explaining major shareholders why and how the special committee agreed to accept Michael Dell-led offer.
WSJ said that some funds may not decide which way to go until late in the process, making the lobbying even more fierce. Another big challenge for the buyout group is to reach and pin down individual shareholders. Terms of the deal dictate that the buyout group must win the majority of all investors, not just the total votes. If a shareholder abstains, that will be counted as “No” votes on the deal.
Dell Inc. (NASDAQ:DELL) shares were down 0.07 percent to $13.35 at 11:02 AM EDT.