Icahn sues Dell in latest attempt to foil buyout
By Poornima Gupta
(Reuters) - Activist investor Carl Icahn sued Dell Inc and its board on Thursday, his latest attempt to derail a $24.4 billion buyout bid by the computer maker's founder and CEO Michael Dell.
Icahn asked a court to block rule changes Michael Dell has proposed ahead of a shareholder vote set for Friday. Icahn and his affiliates also want the court to stop Dell from changing the record date by which shareholders must have purchased their shares in order to vote.
They want to stop Michael Dell from voting any Dell shares acquired since February 5 at any annual shareholder meeting. The February 5 date was when his buyout bid was announced. The lawsuit also seeks the court to bar the company from changing any shareholder voting requirements.
The lawsuit, filed in the Court of Chancery of Delaware, seeks to force the company to call an annual shareholder meeting on the same day as the special meeting on the buyout in case Dell Inc sets a new record date.
"My personal reaction, bombastic," said Larry Hamermesh, a professor at the Widener University School of Law in Wilmington, Delaware, referring to the lawsuit. "The linchpin of it seems to be that it's inappropriate to move or create a new record date because that takes advantage of a cynical effort to put shares in the hands of arbitrageurs who will want to vote for the deal."
Hamermesh pointed out that the judge who is likely to take this case, Leo Strine, often made the point in the takeover battle by industrial gases companies Air Products of rival Airgas that arbitrageurs are shareholders with the same rights.
Icahn, who views Michael Dell's offer as too low, has amassed an 8.7 percent stake in Dell and is leading a charge with Southeastern Asset Management against the buyout with an offer of his own. He has been campaigning to get Dell to set a date for the annual shareholder meeting so he can put up his own slate of directors for the company.
A spokesman for Dell Inc declined to comment on the suit but said Dell board has always sought to act in accordance with its fiduciary duties. Continued...