Michael Dell's and Silver Lake's $24.4-billion U.S. bid to take Dell Inc private suffered a blow on Wednesday after the company's special committee rejected their request to change the voting rules in exchange for them offering $150 million U.S. more.
Dell shares fell more than 4% to as low as $12.28 U.S., their lowest level since news of the takeover broke on January 14, highlighting uncertainty among shareholders about the deal's prospects.
Michael Dell, who founded the eponymous company in 1984 from his college dorm-room, has been arguing since February that Dell needs to restructure as a private company to respond to the challenges posed to its computers by smart phones and tablets.
The special committee, set up by Dell's board to assess whether shareholders were getting the best deal, refused on Wednesday to change the voting rules on the deal but said it would be willing to move the vote's record date forward.
A person familiar with the matter later said Dell's chief executive and Silver Lake expect their deal to collapse unless there is a change in how shareholder votes are counted.
Currently, the buyout must be approved by a majority of all Dell shares, excluding the 15.7% stake held by Michael Dell and his affiliates. The buyout group last week raised its offer by 10 cents U.S. per share on the condition that the deal goes through if approved by a majority of the shares that are actually voted.
This followed two adjournments of shareholder meetings, on July 18 and July 24, after it became apparent the buyout group did not have enough votes supporting the deal.
The consortium estimated that in the latest tally, about 27% of Dell's shares had not been voted and were therefore counted as "no" votes under the current voting standard.
The record date determines which Dell shareholders are entitled to vote on the deal. A second person familiar with the matter said the special committee would be willing to push the record date to August 10 for the vote to be held on September 10.
A shareholder meeting to vote under the current system on Michael Dell and Silver Lake's original offer of $13.65 U.S. per share is scheduled for Friday.
