Arik Hesseldahl

Recent Posts by Arik Hesseldahl

BlackRock May Be Voting Against Dell Buyout Plan

DellatCESThere may be a new dissident shareholder opposed to the $24.4 billion plan to take the struggling computer company Dell in a leveraged buyout transaction: BlackRock.

According to a report on CNBC that aired in the last hour, BlackRock, the world’s largest asset manager, which controls slightly more than three percent of Dell shares outstanding, has indicated that it intends to vote against the buyout plan proposed by CEO Michael Dell and the private equity firm Silver Lake.

I’ve reached out to BlackRock for a comment and haven’t yet heard back, but will update this post if and when I do. Word of BlackRock’s opposition comes on the heels of a statement from T. Rowe Price CEO Brian Rogers yesterday, reiterating that firm’s intent to vote its four percent of shares against the buyout.

If BlackRock’s intentions are confirmed, the percentage of shareholders known to be voting against the buyout plan would now be north of 21 percent. The buyout requires an affirmative vote of at least 43 percent of shareholders. Michael Dell and certain other Dell insiders who control between 13 and 14 percent of shares are not permitted to vote, under provision of the go-shop process set by a special committee of Dell’s board.

The CNBC report, citing unnamed sources, said that vote is at the moment “too close to call.” The votes will be tallied Thursday morning as part of the proceedings of a special meeting of shareholders. It also said that the company may opt to delay the vote, either to give Michael Dell a chance to increase his offer, or to lobby for more support of shareholders.

I pulled together a quick table showing the top Dell shareholders who control at least one-half of one percent of the shares outstanding, indicating those known or suspected to be opposed in red. (Since BlackRock has not yet confirmed its position, I’ve marked it in red, but with an asterisk. Let’s assume for now that CNBC is correct.) While 21 percent of shareholders is not 43, there’s a pretty good chance that there are more shareholders out there opposed to the buyout and siding with the activist investor Carl Icahn, who has argued that the buyout, which values the company at $13.65 a share, is too low.

If the deal fails, the next step in the drama will center around a proxy fight for control of the company. In that battle, Michael Dell will once again be allowed to vote his shares, but there’s a very real prospect that the company ends up with a mixed board of competing loyalties.

With less than two days to go before the votes are tallied, it’s looking like it’s going to be close. Here’s that table. (Click to make bigger.)

dell-shares-opposed-0716


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