Michael Dell today is a thunderstruck man, for the first time fully realising that he may have lost control of the company he founded as a university student 30 years ago, making hard drives and PCs for fellow students in his dormitory room in Austin’s University of Texas.
His US$24 billion bid to take the company private, with himself in near-total control, was facing total defeat – so much so that when a meeting of shareholders opened in Round Rock, Texas, at 8am local time (about 11pm last night, Sydney time) to vote on the proposal, his advisers immediately called off the vote.
Just minutes after the meeting was convened, members of the special committee to Dell’s board of directors moved to postpone it for at least a week – a sure indication that they knew they would lose, and control of Dell would pass to interests led by activist investor Carl Icahn, who had promised shareholders they could keep at least some of their holdings.
Michael Dell and his advisers, including investment company Silver Lake, now have a week to attempt to rally major shareholder votes to their side, presumably by offering a better price for their shares than the previous offer of US$13.65.
It now seems Michael Dell’s only hope is to sharply increase that offer – and even then he could lose.
If the buyout proposal is defeated, Dell will remain a public company and Michael Dell will remain as CEO – but possibly only for the moment. In that event, iCahn and his backers are expected to move swiftly for his replacement, possibly by Icahn himself.
The next meeting to vote on Dell’s proposal is now scheduled for 8am on July 24 at Dell’s Round Rock campus. Seeya there, as they say in Texas.