Ruby R Vale Professor of Corporate and Business Law Discusses Potential Dell Buyout
Web Editor - Published: August 5, 2013
Ruby R. Vale Professor of Business and Corporate Law and Institute of Delaware Corporate and Business Law Director Larry Hamermesh.
Activist investor Carl Ichan sued Dell Inc. and its board on Thursday, August 1st in Delaware’s Chancery Court in an effort to stop an attempted buyout by the company’s founder and CEO Michael Dell. Calling the suit “bombastic” in a Reuters article syndicated to Yahoo! Finance and other media outlets, Ruby R. Vale Professor of Corporate and Business Law Larry Hamermesh said, “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."

Icahn’s suit comes in an effort to block proposed rule changes in the buyout bid that would change the date by which shareholders needed to have purchased their shares in order to vote on the bid. Dell’s bid to buyout the computer maker that he founded began on February 5th, 2013, and Icahn wants to stop Michael Dell from voting any of the shares he has acquired since the buyout talks began. The lawsuit filed by Icahn is also seeking to block the company from changing any shareholder voting requirements.

On Friday, August 2nd, Michael Dell and his primary partner in the offer, Egon Durban of the investment firm Silver Lake Partners, made an adjusted offer and in return received a concession from the special committee that changed a previous rule that shares which did not vote in the special election would be counted as “no” votes. A shareholder vote that was scheduled for the morning of Friday, August 2nd on the original buyout terms was postponed to September 12th.

Professor Hamermesh previously spoke to the New York Times DealBook about Delaware law and the efforts to change the shareholder voting rules, observing that the law calls only for the majority of a company’s public shares to be cast in favor of a deal and adding, “There aren’t any very clear rules, and it generally hasn’t mattered. You don’t really see it coming up often.”

Ichan has objected to the board’s decision to delay the vote and in turn push the annual meeting back to October, arguing that the delays will cause a conflict with Delaware law as the annual meeting will take place more than 13 months after the previous annual meeting. Professor Hamermesh told Michael J. De La Merced for the New York Times DealBook article Michael Dell Salvages Bid for His Company that Delaware’s rules simply gave shareholders the right to demand an annual meeting after thirteen months but do not mandate one.

The Director of Widener Law’s Institute of Delaware Corporate and Business Law, Professor Hamermesh teaches and writes in the in the areas of Corporate Finance, Mergers and Acquisitions, Securities Regulation, Business Organizations, Corporate Takeovers, and Professional Responsibility. In 2010 and 2011, while on a leave of absence, Professor Hamermesh served as senior special counsel in the Office of Chief Counsel of the Division of Corporation Finance at the Securities and Exchange Commission in Washington, DC. Before joining the Widener Law faculty, he served as an associate and later partner at Morris, Nichols, Arsht & Tunnell.

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