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Facing defeat, founder Michael Dell has postponed a vote to privatise the company, a US$24.4 billion plan he proposed in February.

The deal seemed a formality, with the board giving 45 days for someone to come up with a better offer. A rival bid from legendary investor Carl Icahn soon emerged. No-one took it too seriously at first, but many major Dell investors have swung Icahn’s way in the last week, and it has increasingly looked like Dell would lose the vote.

Rather than risk that happening, he has called it vote off until 24 July – next Thursday Australian time. “Today's special meeting of stockholders was convened and adjourned to provide additional time to solicit proxies from Dell stockholders. No vote was taken on the proposed transaction prior to the adjournment,” Dell said in a statement. In other words, he wants time to get small shareholders on board to defeat Icahn and his proxies.

Blackstone Group, an influential private equity firm that owns 4.4% of Dell’s stock, now supports the Icahn plan. Michael Dell now owns only 16% of the company he founded in a university dorm room in 1984, and he and his associates are not permitted to vote.

It it happens, it will be the largest privatisation deal in IT history. The buyout would be largely financed by debt, arranged by private equity firm Silver Lake.

Icahn and his backer Southeastern Asset Management put out a statement after the adjournment was announced:

"It is unfortunate, although not surprising, that Dell's Board and Special Committee have delayed the date of the Special Meeting at which stockholders can vote on the Michael Dell/Silver Lake freeze out transaction. We believe that this delay reflects the unhappiness of Dell stockholders with the Michael Dell/Silver Lake offer, which we believe substantially undervalues the company. This is not the time for delay but the time to move Dell forward.

“Should the Michael Dell/Silver Lake transaction be defeated, we urge the Dell Board to move quickly to hold the Annual Meeting when stockholders will have the opportunity to elect our slate of directors. Our slate has met and unanimously supports our proposed Dell self tender offer and its implementation in accordance with their fiduciary duties. As previously communicated, we believe that our proposed Dell self tender offer has a total value to tendering stockholders of approximately $15.50 to $18.00 per share.”

This is a long way from being over.

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Graeme Philipson

Graeme Philipson is senior associate editor at iTWire and editor of sister publication CommsWire. He is also founder and Research Director of Connection Research, a market research and analysis firm specialising in the convergence of sustainable, digital and environmental technologies. He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.

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