On Thursday morning, the shareholders of Dell Inc. will help decide
what the future might look like for the largest private employer in Central
They will vote their shares for or against the proposed $24.4 billion buyout of the company by founder and CEO Michael Dell and his financial ally, Silver Lake Partners of California.
If they get the approval from stockholders, Dell and Silver Lake plan to take the company private, work for several years to transform the business and make it less dependent on sales of personal computers. The goal is to make Dell Inc. a full-fledged information technology company that offers advanced hardware, software and services to large and mid-sized "enterprise" customers that include both businesses and government agencies. If shareholders vote yes on the buyout, Dell is expected to become a private company before the end of the year. If shareholders vote to reject the buyout, analysts expect to see a power struggle at the company between Michael Dell and the group of investors who oppose him.
The Austin area's economy has a clear stake in the vote's outcome.
Since getting its start in a University of Texas dorm room in 1984, Dell Inc. has grown into a global organization with more than 100,000 workers, including 14,000 in Central Texas. The company has said that, if the buyout is approved, it would continue to make investments that would result in more jobs worldwide, including in Central Texas.
The biggest remaining obstacle to Michael Dell's plan appears to be Carl Icahn, the 77-year-old New York billionaire who is often characterized as either an activist investor or a corporate raider. Much of Icahn's estimated fortune of $20 billion has been tied to his ability to exert pressure on managements of public companies and prod them to take steps, including asset sales and spin-offs, that lead to quick investor profits. In the case of Dell, Icahn hasn't made a formal offer for the company that shareholders can vote on. But he is urging shareholders to vote no on the management buyout with the idea that he will be able to present his alternative plan at a later date.
Icahn and his largest investor ally, Memphis-based Southeastern Asset Management Inc., together own about 12.5 percent of Dell Inc.'s stock, making them the largest outside investors at Dell. Michael Dell and a group of Dell senior managers together own or control nearly 16 percent of the stock. But, under the terms laid out, the Michael Dell and management insider shares won't be counted in the vote on the buyout.
The Institutional Shareholder Services investment advisory firm summed the situation up this way: "Shareholders must weigh the bullish enthusiasm of Icahn ... and several other shareholders who have publicly declared the offer price too low against the apparently increasing headwinds in Dell's transformation process."
The possibility of taking Dell Inc. private was raised in June 2012, when Southeastern Asset Management -- one of Dell Inc.'s largest shareholders -- approached Michael Dell with the idea. After a variety of twists, turns and false starts, Michael Dell and Silver Lake submitted their formal offer in February for $13.65 a share.
A special committee of Dell Inc.'s board insisted on a "go-shop" period after the buyout offer to see whether an alternative deal could be found that would
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