A Delaware judge on Friday denied a request by Carl Icahn to reschedule Dell Inc.‘s annual meeting, dealing a blow to the activist investor’s fight against the deal.
Throughout Friday’s hearing, Chancellor Leo Strine of Delaware’s Court of Chancery defended the work by a special committee of the company’s board, saying that its efforts to secure a higher offer from Michael S. Dell and his partner, the investment firm Silver Lake, benefited shareholders. Mr. Icahn and his ally, Southeastern Asset Management, had accused the directors of working against investors’ interests.
The move by Chancellor Strine means that Mr. Dell’s takeover bid will likely proceed to a shareholder vote as scheduled on Sept 12.
Filing a preliminary proxy statement on Friday, Mr. Icahn and his ally, Southeastern Asset Management, reiterated their effort to replace Dell’s entire board.
The filing reiterated the two investors’ director candidates, including Mr. Icahn himself; A.B. Krongard, a former executive director of the Central Intelligence Agency; and Rahul N. Merchant, the chief information officer for New York City.
Both Mr. Icahn and Southeastern had hoped to force the Dell board to hold an annual meeting on Sept. 12, the same day that shareholders are scheduled to vote on Mr. Dell’s buyout proposal.
The board has currently scheduled a separate annual meeting on Oct. 17, which Mr. Icahn and Southeastern argued violates Delaware law. The two pressed a lawsuit in Delaware’s Court of Chancery in an effort to prevent the two votes from being held separately; during Friday’s hearing, lawyers for the dissident investors asked to fast-track their case.
Mr. Icahn and Southeastern also sought to nullify a decision by a special committee of Dell’s board to change both the voting requirements of the proposed sale and its record date, both meant to ease the chances that the deal will succeed.
Instead of requiring a majority of all independent shares be voted in favor of Mr. Dell’s takeover, the special committee will now accept only a majority of shares voted. And the director group also moved the record date, or the day by which shareholders must have held shares to qualify for the deal vote, to Aug. 13 from June 3, which would let in more shareholders considered likely to vote in favor of the transaction.
“Icahn and Southeastern are seeking to change the Dell board because they believe that the Dell board must be completely reconstituted to ensure that the interests of the stockholders, the true owners of Dell, are appropriately represented in the Dell boardroom,†the two shareholders said in a statement. “Icahn and Southeastern have nominated directors who have strong, relevant backgrounds and who are committed to fully exploring all opportunities to unlock stockholder value.â€
Dell’s board has argued that the moves were meant to secure the best possible outcome for the company’s shareholders. In exchange for the concessions, Mr. Dell and Silver Lake agreed in early August to raise their bid to $13.75 a share plus a special dividend of 13 cents a share.
