The bid by Michael Dell to take the eponymously titled company he founded private looks to be heading for failure after the special committee set up by the company to handle the buy-out rejected a request to change the voting rules.
Michael Dell had offered a 10 cents per share sweetener to change the voting rules so that non-voters would no longer be counted as against the deal.
Further reading Michael Dell: Taking Dell private is 'the right thing to do' Michael Dell raises bid for Dell – by ten cents – then postpones vote to decide company's future Dell or Icahn: Which of Dell’s buyout offers makes the most sense for shareholders?
However, with veiled threats of legal action hanging over them, the committee rejected Michael Dell's request and, hence, the slightly raised offer for the deal will also be withdrawn.
"The committee is not prepared to accept your (voting rules) proposal. We are, however, willing to establish a new record date for a vote on a $13.75 per share transaction under the existing voting standard," wrote special committee chairman Alex Mandl in a letter to Michael Dell's buyout group.
Bringing forward the "record date" for the vote may work in the interests of Michael Dell's takeover. The record date is the cut-off date for shareholders to be able to vote.
According to a source referenced by Reuters, Michael Dell and his backers, Silver Lake Partners, now expect the deal to collapse.
As the rules currently stand, the buyout must be approved by a majority of all Dell shares, excluding the 15.7 per cent stake held by Michael Dell and his affiliates, while non-voters will be counted against the deal.
In addition, the deal has been opposed by "activist investor" Carl Icahn, who has claimed, on the one hand, that Michael Dell is undervaluing the company, while putting forward an alternative bid of his own that nevertheless offers less upfront.
The decision follows two adjournments to the shareholder vote that would decide the company's fate. The special committee, according to Reuters' sources, will push the record date to 10 August for the vote to be held on 10 September.
Icahn, who has put together an 8.7 per cent stake in Dell, has put together a counter-bid with Southeastern Asset Management, also wrote to Dell shareholders, suggesting that the vote should be held on Friday.
"Take the vote on Friday. Be at peace with the outcome. Immediately set the record date for the annual meeting and give stockholders the choice they deserve after all these months of uncertainty," wrote Icahn.