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Suspense Builds Ahead on Dell Vote

T. Rowe Price reiterates its intention to vote against the $24.4 billion privatization plan

With 72 hours to go before shareholders vote on Dell’s fate Thursday, T. Rowe Price, whose mutual fund controls a little over 4% of the stock, reiterated its intention to vote against the $24.4 billion privatization plan claiming it undervalues the company.

It didn’t say it would vote for the competing Icahn proposal that would leave Dell with a public “stub.”

According to the current tote board something like 18% of the outstanding shares are lined up against the leveraged buyout including the positions owned by Carl Icahn, Southeastern Asset Management, Yacktman Asset Management and Pzena Investment Management, all of which publicly oppose the move.

The vote is supposed to be tight, possibly a cliffhanger.

Meanwhile, Carl Icahn, who owns more Dell stock than anybody except Dell founder Michael Dell – who can’t vote his shares for the LBO – came up with the fifth go-round of his effort to shoot down the privatization plan last Friday.

He is now proposing that Dell add a warrant to his scheme for the company to launch a tender offer for 1.1 billion shares at $14 apiece. Holders would get a warrant for each four shares tendered that would let them buy Dell shares for $20 a pop down the road, a proposition that would obviously only be valuable if Dell’s shares surge.

In another open letter to shareholders he claimed the total value would be $15.50-$18 a share, more than the $13.65 on offer from Michael Dell and private-equity house Silver Lake Partners.

Dell’s special committee dismissed the revised bid as risky, taxable and unlikely to pay stockholders the putative bonus. So did shareholder proxy advisor Institutional Shareholder Services (ISS).

The special committee suggested that, if the buyout is defeated, Dell shares could plummet. Icahn retorted that the committee is trying to spook shareholders.

Shareholders who vote against the leveraged buyout are expected to follow up by trying to unseat Dell’s board, a situation in which Michael Dell can vote his 16% interest.

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Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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