Dell Buyout Bid: Delaware Court Decision Due On Expediting Carl Icahn’s Lawsuit Against Dell Inc.

A Delaware court will decide, on Monday, whether to expedite a lawsuit filed by Carl Icahn, the chairman of Icahn Enterprises LP (NASDAQ:IEP), against Michael Dell’s proposal to take Dell Inc. (NASDAQ:DELL) private for almost $25 billion, setting the scene for a face-off between the two billionaires.

Michael Dell and Silver Lake Management L.L.C, on Aug. 2, raised their buyout offer to $13.75 a share, and a special dividend of 13 cents a share plus a regular dividend of 8 cents a share, in exchange for a change in voting standards, which would ensure abstentions would no longer be counted as votes opposing the buyout.

Icahn, in his lawsuit against Dell Inc. and its board of directors, filed on Aug. 1, asked the court to force the computer giant to hold side-by-side votes on Michael Dell’s offer and on Icahn’s proposal for a rival offer to buy back 1.1 billion shares at $14 apiece, in addition to one warrant for every four of their shares, allowing stockholders to buy one Dell share for $20 over the next seven years.

Icahn, who owns about 9 percent of Dell shares, according to Bloomberg, contends that the buyout bid by Michael Dell, who owns about 15 percent of the stock, undervalues the company.

Icahn’s attorneys will seek to expedite hearings on the lawsuit, on grounds that Dell’s shareholders will vote on Sept. 12 on Michael Dell’s offer. Icahn’s competing offer is set to expire on Sept. 30 and Dell Inc.’s executive board is scheduled to hold a vote on Oct. 17, Wall Street Journal reported.

Icahn, in a statement in the court, said shareholders will be harmed if the case is not heard soon because Michael Dell’s offer “is nearly certain” to come through, due to recent changes in voting rules, Bloomberg reported.

Chancellor Leo Strine of Delaware's Court of Chancery could go either way in deciding whether to allow a speedy verdict on Icahn’s lawsuit, because Delaware courts traditionally are hesitant to interfere in shareholder-voting procedures, observers who spoke to the Journal said. But, Icahn’s argument that changes in shareholder-voting standards are unfair is a strong reason for the court to fast-track the case.

Michael Dell, in a statement to the company’s shareholders, on July 24, said he believes that taking Dell private is “the right thing” to do, adding: “Dell needs to transform, and we need to do it quickly.”

He said, in July, that he would continue to be the CEO of the company he founded almost three decades ago, in 1984, even if his buyout plan fails, and that he would continue to fight Icahn, who has said that the PC-maker needs a new chief executive.