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What a Dell vote delay really means

July 16, 2013: 4:44 PM ET

icahn-vs-dellDon't expect Michael Dell to raise his price.

FORTUNE -- There are multiple reports out this afternoon that Dell Inc.'s (DELL) special committee may delay Thursday's scheduled shareholder vote on the $24.4 billion buyout proposal from Michael Dell and private equity firm Silver Lake.

Here is how Bloomberg explained the situation:

Adjourning the vote would give buyers Dell and Silver Lake Management LLC time to boost the bid or declare the current offer of $13.65 a share as best and final, said the person. It would also give shareholders, who can recast their votes up until the last minute, a chance to change their minds, according to the person.

From my understanding, however, there is basically no way that Michael Dell and Silver Lake are going to raise their price. They didn't do it when The Blackstone Group (BX) was sniffing around, and they haven't done it in response to any of Carl Icahn's alternate plans.

For Silver Lake, it's basically a numbers game. The firm really stretched to reach the $13.65 per share price back in February -- Michael Dell is effectively subsidizing part of their premium -- and borrowing costs have only grown in the intervening months.

Michael Dell could easily finance a boosted bid out of his personal fortune, but word is that he's begun to take the battle with Icahn a bit personally. In other words, he doesn't want to give the combative activist any sort of victory, whether in this vote or in a subsequent proxy fight (were shareholders to reject the buyout). Maybe it has something to do with how Icahn keeps threatening to have Dell fired if he gets control of the board...

So if there isn't a better buyout bid coming, what is the point of the vote delay?

A source familiar with the situation says that the special committee believes approximately 15% of the outstanding shares will be absentees, which effectively count as "no" votes. If Michael Dell and Silver Lake lose within that percentage, then they could take a week or so to get votes from those shareholders -- hoping that there would be enough "yes" ballots to push their deal over the finish fine.

All of this, of course, is hypothetical since not all the votes are in. It's possible that the buyout could pass shareholder muster on Thursday, with even some dissenters changing their mind (particularly with Dell shares continues to head south of $13.65 per share -- closing today at just $13.02). Or it could be voted down so overwhelmingly that the delay becomes irrelevant (unlikely, but possible).

So for now we just wait and see. But the one thing I'm telling you won't happen is an increase from Michael Dell and Silver Lake. If they're going to lose, it's going to be at $13.65 per share.

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About This Author
Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

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