Dell Buyout Is Anyone’s Or Maybe Even No One’s Game

As the shareholder vote for Dell Inc (NASDAQ:DELL)’s fate approaches, a few possibilities are starting to emerge. Shares of the PC maker’s stock fell as much as 3 percent Friday after holding steady as the back-and-forth debate between Michael Dell and Carl Icahn stretched on.

Dell Buyout Is Anyone's Or Maybe Even No One’s Game

Mr. Dell Won’t Raise His Bid

Bloomberg’s Serena Saitto reports that Mr. Dell and Silver Lake Partners have supposedly ruled out raising their go-private offer for the company. The pressure has been on them to raise their bid since Icahn announced earlier this week that he had secured the financing needed to cover his offer.

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Sources reportedly told Bloomberg that Mr. Dell and Silver Lake believe the $13.65 per share go-private offer they made earlier this year is a fair premium above where the company’s stock would trade at if the deal did not go through. They also said that Mr. Dell believe he will be able to retain control over Dell Inc (NASDAQ:DELL) in the long term even if his go-private offer doesn’t close.

Michael Dell Thinks He Knows Where Shares Are Heading

This week Dell’s special committee filed yet another presentation aimed at investors with the Securities and Exchange Commission. It suggests that Carl Icahn’s $12 per share tender offer gives Dell Inc (NASDAQ:DELL) a valuation that over double that of Hewlett-Packard Company (NYSE:HPQ), which is its closest competitor.

The committee also said that Icahn hasn’t based it on a solid cost-savings plan. The committee suggested that investors will see a “substantial downside risk” if they do not vote through Mr. Dell’s offer. Mr. Dell apparently believes that shares of the company will fall to $7.90 per share because of the company’s trailing earnings if the buyout is voted down, according to Bloomberg’s sources.

Shareholders Vote July 18

Shareholders will vote on Dell’s fate on July 18, and there seems to be a good chance that neither Carl Icahn nor Mr. Dell will get what they want. Next week we’ll hear what the influential advisory firm Institutional Shareholder Services (ISS) has to say about the two offers, and there have been several reports that the firm will recommend Carl Icahn’s offer.

Chaos At Dell?

All Things D’s Arik Hesseldahl reports that the result could be rather interesting, based on what his sources have said. If ISS recommends Icahn’s offer, then it’s unlikely Mr. Dell will get the majority vote he needs to take the company private. In addition, that “no” vote would “create a certain amount of chaos,” a source told All Things D.

There could end up being a power struggle between Icahn and Mr. Dell over control of Dell Inc (NASDAQ:DELL)’s board of directors. Icahn and his partner Southeastern Asset Management suggested a list of directors in May, and of course Mr. Dell and a number of other shareholders would also suggest some directors. Many consider it unlikely that Icahn could get all of his proposed directors on the company’s board, which is a problem because all of them must be elected in order for the company to be able to tap into the $5.2 billion in financing he secured this week. Once again, ISS will play an important role in the selection of the board members.

All Things D’s sources said the result could very well be a mixed board which contains some directors chosen by Icahn and others chosen by Mr. Dell. If this happens, it’s doubtful that the board would be able to decide what needs to be done in order for the company to recover amidst the falling PC market.