Dell has delayed yesterday's vote on founder Michael Dell's plan to take the slumping computer maker private in a sign the board needs more time to rally support.
The vote was scheduled at a special shareholders meeting at the company's headquarters in Round Rock, Texas. Dell called the meeting to order, then quickly adjourned it without a formal vote. It was rescheduled for next Wednesday.
With the delay, analysts believe Michael Dell may have to sweeten the bid to get the deal done.
The postponement is a significant setback for Michael Dell and the company's board, which has spent the past five months trying to persuade shareholders to approve the buyout proposal.
It's vindication for two major Dell shareholders, Carl Icahn and Southeastern Asset Management, which have been leading the mutiny against the proposed deal. They have argued the price grossly undervalues Dell's long-term prospects, giving Michael Dell and his backers an unfair opportunity to profit from a turnaround.
About 300 shareholders were at the meeting. Many had voted by proxy earlier.
Supporters believe Dell Inc stands a better chance of turning around if it can make long-term strategic decisions without worrying about meeting Wall Street's quarter-to-quarter expectations.
The company's decision to go private is a reflection of the tough times facing the personal computer industry as people delay replacing traditional computers and spend their money instead on smartphones and tablets.
Michael Dellis hoping to evolve the company into a more diversified seller of technology services, business software and high-end computers - much the way IBM Corp had successfully transformed itself in the 1990s.
On Tuesday, a special committee of the company's board sent a letter to shareholders emphasizing its opposition to a rival plan by Icahn and his Southeastern Asset Management fund. Together, they own 13 percent of Dell.
The committee said Icahn could have trumped the US$13.65-per-share offer from Michael Dell and his group of investors, but instead submitted a recapitalization plan that it deemed risky. Icahn's plan calls for rewarding shareholders with some cash now, but leaving about a third of the shares outstanding for shareholders to benefit from a successful turnaround.
In corporate elections like this, shareholders can change their vote right up to the last minute. Michael Dell's task is made more difficult by an agreement that he will not cast his shares, which represent about 16 percent of Dell's stock. That means the board needs slightly more than 42 percent of Dell's outstanding stock to accept Michael Dell's offer to get the deal done.
