Shareholders Will Probably Approve Dell’s Go-Private Plan Tomorrow

September 11, 2013 at 1:29 pm PT

Barring a significant surprise, by this time tomorrow the computing company Dell will be on its way to becoming a privately held company.

At a special meeting of shareholders to be held at the company’s headquarters in Round Rock, Texas, the votes on its leveraged buyout will be tallied up. All indications suggest that there is a sufficient majority of yes votes; Bloomberg News reported today that the vote appears to be sewn up in favor of the Dell-Silver Lake proposal.

The meeting will probably be gaveled to adjournment right after the vote’s result is read. But that won’t end the potential for further drama in this year-long buyout saga.

Even though Carl Icahn — the activist investor who fought the deal for most of the year — has bowed out of any further effort to try and wrest control of the company away from Michael Dell, that doesn’t mean the fight is entirely over.

Remember that Icahn has promised to seek appraisal rights in the the Delaware courts. He has been talking about this since mid-July. Icahn, and presumably other shareholders who agree with him, would abstain from voting on the buyout under this scenario, and then take advantage of a provision in Delaware corporate law — Dell is incorporated in that state — to ask a judge to determine exactly what the company is worth.

As the New York Times reported today, some analysis by experts in this type of case says that Icahn and his supporters have a pretty good chance of squeezing more money out of Michael Dell and Silver Lake.

The analysis comes from the law firm of Fish & Richardson in Boston, and you can read it in full here. The firm looked at 20 years’ worth of decisions in these types of cases before the Delaware Chancery Court and found that most of the time — in 37 cases out of 45 that went to trial — judges ruled that the company was worth more than the buyer was offering.

As the firm’s lawyers put it: “Indeed, opinions from the Delaware Chancery Court show that there has not been a single case during the past twenty years in which any kind of a standalone buyout, management or otherwise, was appraised at a ‘fair value’ that was less than the offer price.”

In eight of those cases, the court set a valuation that was lower than the price offered — none of these were straight buyouts, but mergers in which the target was being absorbed into another company.

This means that, given the historical patterns of the Delaware courts, there’s a pretty good chance that Icahn and other shareholders who have opposed the $13.75 a share offered will get a boost of some kind. Whether or not this will affect the prospects of completing the deal in the end is as yet unclear.

Assuming the case even makes it to trial, which it may not. Sources familiar with the thinking of people in the Dell-Silver Lake camp tell me that they are “not losing sleep” over Icahn’s maneuvering. And so far, Icahn hasn’t had much luck in the Delaware courts in regard to his efforts to scotch the Dell buyout. Last month a judge there denied his petition seeking to intervene and stop the buyout vote that is scheduled for tomorrow.