Dell Head to Court Over Shareholder-Voting Changes

A Delaware corporate-law tribunal is expected on Monday to fast-track Carl Icahn's legal challenge to Michael Dell's DELL -0.07% buyout deal for Dell Inc., setting up a potential showdown between the two billionaires over their'peting visions for the'puter giant.Mr. Icahn has asked Chancellor Leo Strine of Delaware's Court of Chancery to force Dell to hold simultaneous votes on the almost $24.8 billion buyout offer from Mr. Dell and Silver Lake Capital and on Mr. Icahn's attempt to set the stage for a'peting offer. The activist investor says Dell rigged the voting against his bid to replace Dell's board with directors sympathetic to his proposal for a leveraged recapitalization of the'puter maker.

Mr. Icahn is arguing that recent changes to voting rules have robbed the'pany's shareholders of the right to choose between the dueling deals. Dell, meanwhile, says Mr. Icahn's lawsuit is "just another soapbox" to publicize his fight with the special'mittee of the'pany's board that is putting the offer from Mr. Dell and Silver Lake to a shareholder vote.The issue up for decision Monday is how fast the case will move. With a shareholder vote set Sept. 12 on the buyout bid from Mr. Dell and Silver Lake, the financing for Mr. Icahn's rival offer set to expire Sept. 30, and Dell's board vote set for Oct. 17, Mr. Icahn argues that failure to get a speedy hearing on his challenge could be fatal his legal case.

Chancellor Strine could move the case along quickly or let the deal action play out and leave Mr. Icahn to pursue his remedies after the fact. Delaware courts are reluctant to interfere in shareholder votes, but the question of whether the shareholder-voting changes are fair is one the judge may want to tackle in advance, observers say. They also expect the market is right in betting that Mr. Dell's deal for the'puter'pany he founded will survive the legal attack, unless new facts turn up."When dealing with voting rights like this, I'd be stunned if [Chancellor Strine] didn't just say, 'Let's cut to the chase and get this scheduled,'" said Lawrence A. Hamermesh, professor of corporate and business law at Widener University's Institute of Delaware Corporate Law.

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