Efforts to complete the controversial sale of Dell Inc. entered
a heated new phase, as Michael Dell personally met with big
stockholders and as Dell's board pitched small investors ahead of a
rescheduled stockholder election.
After months of trying to persuade shareholders on the merits of
the deal, Dell's board last week adjourned a shareholder vote on
Thursday to buy more time to convince Dell stockholders to cast
their ballots or change earlier "no" votes in favor of the $24.4
billion buyout proposed by Mr. Dell and his private-equity ally,
Silver Lake.
Meanwhile, Dell investors and the company's board are playing a
waiting game to see what, if anything, the Mr. Dell-Silver Lake
group will do before the new shareholder election on Wednesday.
Some people familiar with the thinking of investors and Dell's
board are anxious for the buyout group to publicly declare they
won't improve the sale terms, or go the other way and offer to
sweeten the deal terms in some way. The proposed buyout would pay
shareholders $13.65 per share.
If Mr. Dell and Silver Lake were to take one of those two paths,
they would need to make a decision by Tuesday or early Wednesday at
the latest, say people involved in the buyout deal.
Over the weekend, so-called proxy solicitor firms working for
Dell directors called individual investors, such as people who own
Dell shares in their brokerage accounts, according to people
familiar with the outreach efforts.
The efforts to press even the smallest shareholders to vote
reflect the tough arithmetic facing the buyout group. Holders of
about 22% of Dell shares eligible to vote have publicly opposed the
buyout.
Shares that aren't cast at all count as "no" votes, and people
familiar with the vote tally said more than 20% of Dell shares
eligible to vote weren't voted at all in the election last week.
It's unclear if some of the nonvoters didn't act on their ballots
because they expected the election would be postponed, or as a
measure of protest against the deal, or some other reason.
One of Dell's institutional shareholders said some Dell
stockholders opposed the buyout until close to the voting deadline
last week as a tactical move. "If you vote yes too early, there
never will be any opportunity" to clamor for a higher offer price,
the investor continued.
As the buyout group continues to press the deal with
stockholders, Mr. Dell also met in recent days to discuss the
buyout deal with institutional shareholders, including Franklin
Mutual Advisers, according to people familiar with the
conversations. The unit of Franklin Resources Inc. oversees eight
mutual funds with about $60 billion of assets under management.
Franklin Mutual Advisers was among the large Dell stockholders
who voted against the buyout deal in last week's shareholder
election, said people familiar with the matter. As of March 31, the
unit held about 10.1 million Dell shares.
The parent company, Franklin Resources, reported owning nearly
35 million Dell shares as of March 31, the latest public
disclosures. That would be roughly 2% of all Dell shares, if the
firm's holdings haven't changed.
Dell shares fell Monday by 12 cents, or 0.9%, to $13.02. Dell's
stock price in recent weeks has traded well below the buyout price,
but not at the level that would indicate traders believe the sale
will fall apart.
Write to Shira Ovide at shira.ovide@wsj.com, Kirsten Grind at
kirsten.grind@wsj.com, and Joann S. Lublin at
joann.lublin@wsj.com
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