Looks like Michael Dell, Silver Lake Partners and the company's Special Committee has finally reached a new agreement. The current CEO and his partners will pay an increased price of $13.75 per share, up from February's agreed $13.65. They will also make a payment of a special dividend at or before closing of $0.13 per share, and a guaranteed third quarter dividend of $0.08 per share that will be paid at or before closing.
In return for the extra $350+ million injection, Dell Inc.'s Special Committee on the Board has agreed to modify the voting rules so that the buyout transaction must be approved by the majority of shares that are actually voting. The previous agreement counted non-voting shares as opposed to the buyout plan, thus even if the majority of votes approved of the deal, the non-votes could have terminated the buyout.
"The amended transaction also includes a reduction of the breakup fee that would be payable in the event the merger agreement is terminated and within 12 months thereafter the Company effects a recapitalization transaction that does not result in there being an absolute majority stockholder of the Company. That fee is reduced from $450 million to $180 million," the Special committee said.
The increased offer is surprising given that Michael Dell said on July 24 that he would not budge from his revised buyout offer of $13.75 per share, that it was the best and final offer he and his partners could give. "I believe this offer is in the best interests of the company and our shareholders," he said. "The decision is now yours. I am at peace either way and I will honor your decision."
However the Board rejected the bid earlier this week, and instead presented a counteroffer that kept the increased per-share value, but extended voting to allow investors who purchased Dell shares after June 3 the ability to vote on the buyout. Previously they were not allowed to participate, and shares that didn't vote would still count as opposed to the deal.
Then on Thursday activist investor Carl C. Icahn and his affiliates filed a complaint against Dell Inc. and the members of its Board of Directors in the Court of Chancery of the State of Delaware. They are seeking to prevent the company from setting a new record date for a special meeting at which shareholders will vote on Michael Dell's recent offer. They also argue that if a special meeting is held, it should be during the company's annual meeting.
The complaint also states that Icahn seeks to "obtain a declaration that the Dell Board breached its fiduciary duties to the stockholders by, among other things, adjourning the Special Meeting on July 24 without also scheduling the Annual Meeting at the same time." He also seeks to "enjoin the company from changing the stockholder voting requirements in the Merger Agreement", and to "[obtain] damages from Dell and its directors for any losses caused by Dell and its Board."
Unfazed by the complaint, the Committee said on Friday that the revised definitive merger agreement has been approved by Dell’s Special Committee and by the independent members of Dell’s Board of Directors. The Committee intends to establish a new record date of August 13, 2013 for shareholders eligible to vote on the transaction at the Special Meeting which will be adjourned from August 2, 2013 to September 12, 2013.