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Michael Dell's effort to lead a $24.4 billion buyout of the company he founded suffered a serious setback on Thursday after a special committee of Dell 's board adjourned the shareholder vote on the deal to avoid losing at the ballot box.

The delay will give Michael Dell and his partner in the deal, private equity firm Silver Lake, until July 24 to secure additional shareholder support for their buyout, either by twisting some arms and beating the bushes for more votes, or increasing their $13.65-a-share bid for the PC maker. Michael Dell was reportedly about 150 million votes short of gaining approval for his transaction.

For now, however, the vote delay is a victory for investor Carl Icahn and Southeastern Asset Management, the two big Dell shareholders that have been leading the charge against Michael Dell's deal. Icahn, who said on CNBC yesterday afternoon that Dell's board is one of the worst he has ever seen, has blasted the delay tactic. "Can you imagine a political election contest where one side could push off the election to wait for a better day to hold the election-a date when it is hoped they might do better in the vote than they would have done on the originally scheduled election date?" Icahn recently wrote in an open letter to shareholders.

The vote delay doesn't kill Michael Dell's deal. In one positive sign for Michael Dell, some major shareholders who earlier this week indicated they were joining Icahn and Southeastern Asset Management in opposing the deal, like BlackRock and the Vanguard Group, apparently were bluffing in order to put pressure on Michael Dell to increase his bid for the company and ended up voting in favor the going-private transaction. Another positive sign for Michael Dell: Shares of Dell rose by more than 2% in Thursday morning trading after falling for most of the week. Since votes that are not cast are being counted as no votes, Michael Dell might concentrate on bringing out more votes to get his deal approved the next time around.

The battle for Dell has increasingly become personalized and bitter. Michael Dell reportedly has come to resent Icahn's intervention and sees the 77-year-old Icahn as a corporate raider and unworthy opponent. For his part, Icahn, who knows how to drive his billionaire rivals crazy, has implied that Michael Dell is trying to steal the company on the cheap from shareholders and that he is not the right man to be managing the company's affairs as it transitions from a PC maker to a company that supplies business services and hardware. "It is unfortunate Mr. Icahn continues to conduct his campaign by trying to discredit the special committee and accuse it of frightening Dell stockholders," the special committee of Dell's board said in a statement this week.

Icahn has proposed Dell conduct a leveraged tender offer for $14 a share in cash plus one warrant for every four shares tendered. The warrant would give shareholders the right to buy one Dell share for $20 in the next seven years. Icahn has valued his deal as being worth as much as $18 a share. The special committee of Dell's board has argued that Icahn's proposal requires too much debt and puts shareholders in an uncertain position. Icahn's success in galvanizing support for his bid has appeared to surprise Micahel Dell-many observers and investors appeared to think Icahn lacked the financing to mount a credible counter-proposal and would be unable to convince many investors to oppose Michael Dell's transaction. But Icahn was able to make his proposal more convincing after coming up with the financing for it, largely by digging into his own pockets. For his part, Michael Dell has so far strongly resisted the idea of increasing his bid for the company, even after the special committee of Dell's board recently suggested it.

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When Michael Dell announced a plan in February to take Dell Inc. (DELL) private, today was supposed to be anticlimactic -- the day when shareholders would easily bless the buyout of the computer maker he founded 29 years ago.

Instead, the run-up to the vote on Dell's $24.4 billion proposal has turned into a nail-biting game of chicken that has left Dell's side racing to lobby shareholders who consider the bid too low. Rather than ending with a victory dance for Dell, today may yield a decision to postpone the vote deadline to give him and private-equity firm Silver Lake Management LLC more time to convince investors of the merits of the leveraged buyout -- or to simply increase the $13.65-per-share bid.

Boosting the offer to $14 a share might suffice, said Angelo Zino, an analyst at Standard & Poor's Financial Services in New York.

"If you get the $14 offer from Michael Dell, it's enough to quiet enough of the shareholders out there and it's enough to get the deal done," he said.

On the eve of the vote, Chief Executive Officer Dell and Silver Lake weren't budging, considering $13.65 their best and final offer, according to people familiar with the duo.

That position leaves Dell's shareholders in a quandary: If they reject the deal, the stock, now at $12.88, could drop on concerns about Dell's weakness in personal computers and its inability to compete with bigger companies in the corporate technology market. In Germany today, Dell traded at the equivalent of $12.83 at 10:00 a.m. in Frankfurt.

'Shares Tank'

"You would see the shares tank, post a turn-down of $13.65," said Zino. Michael Dell predicts the stock will fall to about $7.90 a share, based on trailing earnings, if the LBO is voted down, according to a person with direct knowledge of his thinking.

A more likely scenario is that the special committee of Dell's board that is considering the bid postpones the vote, possibly by adjourning the meeting right after it starts, a person with knowledge of the matter has said.

A delay would prolong Dell's struggle for control against billionaire investor Carl Icahn, who has pushed for months for the founder to raise his bid and has offered his own proposal. Icahn's rival offer of $14 would allow Dell shareholders to retain equity in a publicly traded portion of the company, plus a warrant that could be exchanged for additional stock should Dell climb higher than $20.

Open Letter

Icahn and Southeastern Asset Management Inc., which holds a 3.98 percent Dell stake, urged the board not to postpone the vote in an open letter to shareholders yesterday.

"If the special committee doesn't like the $13.65 price, then as we see it, they should not have approved the Michael Dell/Silver Lake transaction in the first place," they said in the letter.

Phone and Internet voting is scheduled to close a minute before midnight New York time, and live polling will close about 15 to 20 minutes after the meeting starts, said David Frink, a Dell spokesman.

For Michael Dell, a loss to Icahn would be particularly irksome, according to a person familiar with his thinking. He understood when he started working on the idea of taking Dell private that another, higher bidder could win out. That would have been an elegant way to exit the company that carries his name by creating value for all stakeholders, the person said.

The last thing Michael Dell expected, the person said, was the prospect of losing the company to Icahn, whom he considers a corporate raider.

Cash, Warrants

Icahn and Southeastern say their proposal values Dell at about $15.50 to $18 a share. The special committee of the board calculated that if Icahn's proposal gets consummated, each shareholder would get $9.99 in cash and 0.18 warrants.

Michael Dell, meantime, says a plan like Icahn's would add substantial debt, curb financial flexibility and "hurt the company's ability to weather an economic or business downturn," the CEO said in a June 21 regulatory filing.

Another person with direct knowledge of the situation said the special committee believes the buyout group has room to raise the offer, and hasn't been formally told by the buyers that their bid is best and final. Adjourning the vote would give shareholders, who can recast their votes up until the last minute, more time to change their minds, according to the person.

"Instead of executing the vote and maybe not getting it passed, Dell may need to postpone the vote until they know it could get passed through," said Jeff Fidacaro, an analyst at Monness Crespi Hardt & Co. in New York.

Under Pressure

The stock will probably remain under pressure until the final decision, while staff may be tempted to jump ship. The company announced the resignation of Kelly McGinnis, Dell's global head of communications, in an internal memo earlier this week.

Victory for Silver Lake and Dell would mean investors cash out while the company goes private and Michael Dell embarks on a turnaround of the business he founded in a university dormitory in 1984.

CEO Dell wants to take the company out of public hands to gain more freedom to transform the PC maker into a leaner, nimbler provider of data-center gear and corporate software.

A stream of disappointing earnings, dismal financial projections, endorsements from influential shareholder-advisory firms, and a steady campaign by Dell's board has persuaded many investors that there are no other palatable options, said Sachin Shah, a merger-arbitrage strategist at Albert Fried & Co.

"You can't say, 'I'm not voting for the deal,' and then see the stock decline," said Shah, whose New York firm has clients who collectively own millions of Dell shares.

Dell's Prospects

Icahn, meantime, is offering shareholders a chance to participate in the company's recovery, asking them to forgo the buyout's quick money and put their faith in Dell's prospects -- even though that may mean tolerating the risk of a further decline in the shares.

To win the day, the buyout needs approval from a majority of holders, excluding Michael Dell, who owns a 15.6 percent stake. Yet investors that hold at least 20 percent of the stock have voiced opposition to the deal, saying it undervalues the company's prospects, and some have thrown their weight behind Icahn's plan. Shareholders who abstain will be counted as voting against the deal.

'Attractive Gain'

Some investors have already resigned themselves to the offer that was initially outlined in February.

"We would like to see this go through in order to avoid the likely sudden drop in share price and realize an attractive gain," Kyle Timmermann, a portfolio manager at Parkway Advisors LP in Abilene, Texas, said in an e-mail. Parkway, which owns almost 12,000 Dell shares and $600,000 of the company's bonds, advises insurance companies on investments.

Other shareholders have remained steadfast in their view that Dell and Silver Lake undervalued the company. Case in point: Yacktman Asset Management Co., based in Austin, Texas. According to its latest filing, Yacktman owns 14.9 million Dell shares. While Yacktman would profit by taking the Dell-Silver Lake buyout, the firm is voting against the deal and supporting Icahn and Southeastern's alternative proposal.

"It's hard to find things to invest in, and we'd rather own this than cash," said Stephen Yacktman, co-chief investment officer.

Buybacks, Acquisitions

Dell has destroyed value by buying back shares at too high a price and overpaying for acquisitions, including computer-services company Perot Systems Corp., data-storage company Compellent Technologies Inc. and software maker SecureWorks Inc., Yacktman said.

BlackRock Inc., which has a 4.4 percent stake in the third-largest PC maker, voted against the buyout, according to a person with knowledge of the matter.

Once the world's top PC maker, Dell has become a patchwork of desktops and laptops, tablets, enterprise software and data-center gear thanks to a slew of acquisitions since 2007. Sales (DELL) and profit are declining, and the company is projected to generate less net income this fiscal year -- $1.44 billion -- than it did in 1999 on a third of the sales.

Dell shares, once an engine of wealth creation for investors and trading higher than $25 before the 2008 financial crisis, were at less than $9 last November. PC shipments, which account for more than half of Dell's sales, dropped 10.9 percent industrywide in the second quarter, their fifth straight period of decline, market researcher Gartner Inc. said last week. Many Dell investors want to take the sure money and avoid another swoon.

"Given the uncertain outlook, a buyout would be in the company's best interest," said Bill Kreher, an analyst at Edward Jones & Co. who has a hold rating on the shares.

Investor Meetings

The company's committee has met with major shareholders to seek backing for the buyout, and Michael Dell has attended some meetings with key investors, said a person familiar with the matter. Dell's proxy advisers have also been calling small investors through their brokers and at home to ensure a favorable turnout, another person said.

CEO Dell and Silver Lake's bid picked up some momentum earlier this month when Institutional Shareholder Services Inc., an influential shareholder-advisory firm, recommended investors support the deal. Securing ISS's endorsement was a key win for the buyout team. Glass Lewis & Co. also backed the bid. Retail shareholders tend to follow the recommendation of the board, which in this case supports the deal.

"From a public-company shareholder's perspective, if your CEO is willing to buy your falling knife for the privilege of catching it, there is probably a price at which you should let him," ISS said.

To contact the reporters on this story: Aaron Ricadela in San Francisco at aricadela@bloomberg.net; Serena Saitto in New York at ssaitto@bloomberg.net

To contact the editor responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net

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Dell Inc. adjourned a vote on its proposed $24.4 billion sale to its founder on Thursday morning, signaling that the planned transaction lacked enough support from shareholders. The meeting has been rescheduled for July 24 at 6 p.m. Eastern time.

But a number of big institutional investors switched their votes to "yes" overnight, a person briefed said, signaling hope that the leveraged buyout is still viable.

That group - including the Vanguard Group, BlackRock and the State Street Corporation - had previously indicated that they opposed the deal.

The moves indicate the kind of gamesmanship that has surrounded the transaction in the final hours before shareholders formally voted. Advisers to the transaction believe that many investors were simply bluffing to try and force a higher bid from the proposed buyers, Michael S. Dell and the investment firm Silver Lake.

A sizable group of investors, which included the three big money managers, as well as Invesco and the Bank of New York Mellon, switched their vote to "yes" sometime around midnight, the person briefed on the matter said.

One investor whose vote is still being awaited is Franklin Resources, this person added.

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Summary: No matter how Dell's going private saga turns out, enterprise buyers need to know that things will change. Here's what you need to know before pulling the trigger on a purchase.

Dell is holding a shareholder vote on Thursday and the showdown is investor Carl Icahn's proposal vs. the go-private plans of Michael Dell and Silver Lake Partners. While the play-by-play and personalities are fun to watch corporate tech buyers need to pay attention because they ultimately will have to make a call on whether Dell will remain as a go-to supplier.

Of course, Dell could put off Thursday's shareholder vote to allow Michael Dell and Silver Lake to raise their bid if needed. Icahn last week sweetened his bid for Dell to $14 a share plus warrants that could boost the value of the deal. Michael Dell and Silver Lake are offering $13.65 in cash for each share.

The financial showdown is notable since Dell's business is stumbling, interest rates are rising and many of the assumptions behind buying the company now seem flawed. It's quite possible that any buyer for Dell may have a case of remorse in the months to come. Enterprise buyers don't have to worry about the soap opera, but do have to note the moving parts. After all, no one wants to risk a big purchase amid a billion-dollar pissing match you're not involved in.

Icahn sweetens bid for Dell: Will it sway shareholders? | Icahn promising new, higher Dell bid to be unveiled on Friday | ISS endorses Dell, Silver Lake buyout plan for $24.4B | Dell CEO reportedly won't raise offer to take PC company private | Dell to investors: Icahn's deal dicey, business stinks | Why Icahn's Dell plan could be a FUD nightmare

Here's a look at the scenarios and moving parts that will affect enterprise buyers:

Icahn wins. Icahn has stated that Dell can be run better and that he'd toss management with new blood. The investor upped his bid enough to sway at least one large shareholder, T. Rowe Price. If others shareholders follow Icahn, Dell would postpone its shareholder meeting for Michael Dell and Silver Lake to up their offer for the company. Michael Dell and his partners may not raise their $13.65 a share in cash bid. Why? Interest rates have spiked and PC sales have tanked. Borrowing money to revamp a company is simply harder than it was just a few months ago. Meanwhile, Dell's business, which relies on PCs, has tanked.

There has to be some part of Michael Dell who wants to walk away from his namesake company. He recognizes the years it will take to transform Dell. If Icahn's proposal really does turn out to be better---Dell's special committee to evaluate offers doesn't think so---then Michael Dell benefits. Wouldn't it make more sense to hand Icahn the keys, let him run the company and start something new. Michael Dell could start Dell 2.0 across the street. Perhaps he could name the company Lled (Dell spelled backwards) as a cloud, software and services outfit. Michael Dell could be the personification of the post-PC era, profit from Icahn and then beat the hell out of the investor later.

Should Icahn win, enterprise customers have to watch closely. Today, Dell is running business as usual in many respects, but an Icahn victory almost guarantees that your account reps and support contacts will change. Management would change at Dell and that usually means a lot of turnover. An IT buyer just doesn't need the hassle and would look at vendors such as HP and Lenovo. Buying technology is hard enough without all the uncertainty.

Michael Dell and Silver Lake win. Should Michael Dell and Silver Lake take Dell private enterprise buyers can breathe a sigh of relief---for a few months. Dell needs to be revamped and the sooner it can minimize PCs the faster it can focus on higher growth areas and ultimately go public again. Dell is also likely to cut costs and your friendly neighborhood support people and account reps could disappear. Another wrinkle: If Dell's stock goes away it's unclear how the company will retain key employees restricted stock units and other perks. In other words, Dell won't change as fast under Michael Dell and Silver Lake, but change is afoot regardless and that can impact how and who you buy your technology from.

Dell doesn't go private at all. This scenario seems to be a bit of a reach, but the PC sales declines are jarring. If Dell doesn't go private its stock will crater. Dell will have to cut costs, rationalize operations and revamp. That move will hamper turnaround plans to some degree. At the very least, Dell will lack the resources to aggressively acquire the parts it needs to focus on software and services.

Can Dell innovate? In all the aforementioned scenarios it's unclear whether Dell can truly be innovative enough to leap frog the competition. For years, Dell's primary innovation has been the supply chain and managing cash better. HP and Lenovo have caught on to that model and then some. Meanwhile, Dell's R&D spending as a percentage of revenue has historically been 2 percent or so. A company can't credibly talk about innovation until it actually spends some money on R&D. Without real innovation wins, Dell will always be seen as a commodity box player and customers will expect the pricing that goes along with it.

Leverage. When the dealing is done, it'll be worth watching the debt load for Dell. If Icahn wins, Dell will be heavily leveraged. If Silver Lake and Michael Dell win there will also be leverage. With interest rates rising, debt isn't the slam dunk it was just a few months ago. Dell's entire turnaround plan depends on whether it has the resources to invest in new parts of the business. If Dell is hampered by debt it won't be able to finance any turnaround. It'll be more of the same pain for Dell.

It'll be a buyers market for gear. No matter what happens Dell will have to battle the fear, uncertainty and doubt projected by rivals. HP is in the middle of a turnaround, but has outlined a plan and appears to be hitting targets. HP is also getting out of the balance sheet doghouse and can acquire and spend on R&D in the months ahead. HP is likely to use its turnaround tale as a hammer to hit Dell with. Customers can use that perception battle to squeeze all parties for discounts.

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Credit: Reuters/Brendan McDermid/Files

A Dell laptop computer is pictured in New York in this August 26, 2008 file photograph.

The special shareholders' vote is now too close to call, with activist investor Carl Icahn and major shareholder Southeastern Asset Management repeatedly arguing that the offer undervalues the company and its growth prospects.

Dell may therefore decide to delay the vote to gain time to shore up stronger support for the deal, a person familiar with the matter told Reuters on Tuesday, asking not to be identified because the deliberations are confidential.

IF SHAREHOLDERS SAY "YEA"

Longer term, this means Dell will no longer be a public company and Michael Dell and his private equity partner Silver Lake will get their chance to turn it around away from public scrutiny.

But since the results are likely to be close, shareholders opposed to the buyout could exercise their Delaware appraisal rights, which basically means they are free to appeal to a Delaware judge to value their shares. The option, however, is costly and time-consuming with no guarantee a judge would see things differently from Michael Dell.

Icahn at one point in the past few months threatened "years of litigation" should he not get his way. He may still resort to legal means to contest the deal.

IF SHAREHOLDERS SAY NAY

This may have a number of implications.

DISRUPTION - There will be continued uncertainty and disruption within the company. Analysts had warned that customers will defect because service could worsen during the struggle to turn the company private or keep it public.

Michael Dell has pledged to remain committed to the company he founded if his attempt fails.

BATTLE FOR THE BOARD - A pitched battle between Michael Dell and Icahn over control of the board may emerge. Icahn has already announced his own slate of board directors, though some analysts have questioned their credentials and turnaround expertise.

Icahn has called for a quick annual shareholders' meeting, at which investors can vote on nominated directors. He needs his new board to be elected to be able to put forward, for a vote, an earlier offer he made in partnership with Southeastern.

Michael Dell is expected to float the current slate of directors, with a few additions.

HIGHER BID FROM MICHAEL DELL AND SILVER LAKE - Michael Dell, after months of maintaining that the shares are worth $13.65 a piece, may decide to bump up the offer to appease disgruntled shareholders and close the deal. Any bump in the price will likely have to come from Michael Dell as Silver Lake had declined to raise its contribution further during late-stage negotiations leading up to the February 5 buyout agreement.

The Dell founder then agreed to roll over his shares at $13.36 each to subsidize and finalize the deal at the $13.65 offered to shareholders. The current offer is the sixth one since discussions started in earnest in October.

However, Michael Dell and Silver Lake have ruled out raising their offer even if a vote is delayed, said people familiar with the plan on Tuesday, asking not to be identified because the deliberations are confidential.

(Reporting by Poornima Gupta; Editing by Richard Chang)

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The battle over Dell Dell is finally coming to a head, and Carl Icahn fired the latest salvo Wednesday in a renewed broadside against a board he has accused of using scare tactics to bully shareholders into approving the PC-maker's leveraged buyout.

A shareholder vote on Michael Dell 's proposed takeover of the company - in partnership with Silver Lake Partners - is set for Thursday, but amid rumors the vote could be postponed Icahn took the opportunity to renew his harsh criticism of the board.

Icahn doesn't blame Dell himself nearly as much as he does the board, which he called "completely dysfunctional."

The board set things up so the founder could buy the company cheaply even though its largest shareholder at the time, Southeastern Asset Management, urged them to consider a leveraged recapitalization instead.

Southeastern got little traction with its proposal, but since Icahn entered the fray the board has been playing defense - though Dell himself has been quiet.

The board has rebuffed Icahn's rival offer for proposing too pile too much leverage on the company, but he argued at Wednesday's CNBC/Institutional Investor Delivering Alpha conference that the board is all but stealing the business out from under shareholders.

One issue with Icahn's bid skeptics have raised is the uncertainty over who would run the company. Wednesday, Icahn said he has been discussing the possibility with technology veterans, one of whom he believes he will be able to convince to take the reins if the LBO is voted down and a proxy fight ensues.

"Nobody wants to walk into this fight [yet], but I think we'll have them by the time of the proxy fight," Icahn said, pointing out other successful campaigns that included replacing a chief executive including his lucrative victories at Biogen Idec and Motorola.

Icahn, who railed against a U.S. corporate governance he says is rife with the modern form of a buddy system, says he finds that directors usually do whatever the CEO asks "because the CEO takes them to the Super Bowl...or they play golf."

But Dell, he says, is the worst example he can think of in his career. The board "reminds you of a dictatorship," he says, and would have successfully orchestrated the deal if Icahn didn't have a few spare billion around.

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Michael Dell and Silver Lake Management LLC, approaching a deadline to woo Dell Inc. (DELL) shareholders to vote for their $24.4 billion buyout, consider the $13.65-a-share bid to be their best and final offer, people familiar with the situation said.

The buyout group's view is that the bid represents a significant premium, considering borrowing costs have risen and Dell's earnings have shrunk amid a deterioration in the personal-computer business since the deal was announced, said the people, who refused to comment on the record because they consider it unnecessary.

A special committee of Dell's board, which believes the buyout group has room to raise the offer, hasn't been formally told by the buyers that their bid is best and final, said another person with direct knowledge of the situation. The committee is contemplating delaying the July 18 deadline for shareholder votes on the buyout by about a week, seeking a higher bid or time to win support for the deal, that person said yesterday. Adjourning the vote would give shareholders, who can recast their votes up until the last minute, more time to change their minds, according to the person.

"Instead of executing the vote and maybe not getting it passed, Dell may need to postpone the vote until they know it could get passed through," said Jeff Fidacaro, an analyst at Monness Crespi Hardt & Co. in New York.

Struggle Continues

The group is likely to make a decision by tomorrow morning if the votes already cast against the buyout are enough to scuttle it, said the person. The June 3 record date, by which one had to invest to be entitled to vote, won't change, said the person.

A delay would prolong Dell's struggle for control against billionaire investor Carl Icahn, who has pushed for months for the founder to raise his bid. BlackRock Inc. (BLK), which has a 4.4 percent stake in the third-largest PC maker, voted against the buyout, according to the person.

Icahn and Southeastern Asset Management Inc., which holds a 3.98 percent Dell stake, urged the board not to postpone the vote in an open letter to shareholders today.

"Quite frankly, if the special committee doesn't like the $13.65 price, then as we see it, they should have not approved the Michael Dell/Silver Lake transaction in the first place," they said in the letter.

David Frink, a spokesman for Round Rock, Texas-based Dell, declined to comment. Lauren Post, a spokeswoman for BlackRock, declined to comment, as did a representative for Silver Lake.

Deal Opposition

T. Rowe Price Group Inc., which holds 4.1 percent, reiterated its opposition earlier this week, saying the buyout doesn't "reflect the value of Dell." To succeed, the buyout needs to win approval from a majority of holders excluding Michael Dell, who has about a 16 percent stake.

Investors opposed to the transaction own more than 20 percent of Dell shares, according to a report last week from shareholder adviser Glass Lewis & Co., which is backing Dell's bid with Silver Lake. Opponents may also include Harris Associates LP, Yacktman Asset Management Co. and Pzena Investment Management Inc. (PZN), according to the report.

The special committee of Dell's board repeated its support for the Silver Lake-Dell offer in a statement yesterday.

Shares Fall

Dell fell 1.5 percent to $12.82 at 12:12 p.m. in New York.

The extra yield investors demand to hold Dell's bonds rather than government debt has climbed to 359 basis points, or 3.59 percentage points, from 308 on Feb. 5, Bank of America Merrill Lynch index data show.

Icahn, now Dell's top outside holder with an 8.7 percent stake, has made at least four attempts to derail the buyout. In his latest effort last week, he pledged to sweeten his offer to acquire about 1.1 billion Dell shares at $14 each by adding warrants that investors could exchange for additional shares. The latest proposal's value to shareholders would be about $15.50 to $18 a share, Icahn said last week.

"We do not believe that Mr. Icahn's proposal is superior to the certainty of value offered by a sale of the entire company at $13.65 per share," the special committee said. "A sale at a premium remains a superior option to a leveraged recapitalization."

Cloud Competition

Icahn previously said he was preparing to exercise appraisal rights in court, and urged fellow shareholders to do the same. Dell holders who don't vote in favor of the deal would be eligible to exercise those rights under the General Corporation Law of Delaware. They would be entitled to receive a cash payment equaling the "judicially determined" fair value of their Dell shares, a process that could leave them with more or less than the $13.65 offer price.

Michael Dell is attempting to take his company private, almost three decades after he founded it, to help transform the PC maker into a contender in data-center equipment and software. His proposal won key endorsements last week from Institutional Shareholder Services Inc. as well as Glass Lewis.

Dell may need years to effect a turnaround if the Michael Dell-Silver Lake and Icahn deals don't come to fruition, and the stock could fall to less than $9, said Jayson Noland, an analyst at Robert W. Baird & Co. in San Francisco.

"There's substantial downside if these deals were to go away," Noland said. "The stock could go to 8-something or even lower. The PC market is bad and Dell is heavily exposed."

To contact the reporter on this story: Serena Saitto in New York at ssaitto@bloomberg.net

To contact the editors responsible for this story: Jeffrey McCracken at jmccracken3@bloomberg.net; Pui-Wing Tam at ptam13@bloomberg.net

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A special committee of Dell's directors is likely to put off a vote on the computer company's proposed $24.4 billion sale to its founder that is scheduled for Thursday morning, amid stronger signs of rejection by shareholders.

Shareholders representing roughly 30 percent of Dell shares were arrayed against the leveraged buyout as of Wednesday evening, a person briefed on the matter said. They include money management firms like BlackRock, the State Street Corporation and the Vanguard Group.

Investors still have about 12 hours to vote, meaning that number could rise even higher. The deal faces a high hurdle to succeed: more than 42 percent of shares must be cast in favor of the deal, with abstentions counting as no votes.

The list of dissident investors extends far beyond Carl C. Icahn and the asset management firm Southeastern Asset Management, who together own about 12.7 percent of Dell stock.

That level of opposition makes it likely that the Dell board committee will postpone the vote by several days, people briefed on the matter said. Other related matters, including the record date by which shareholders must have owned shares to participate in the vote, have not yet been settled, one of these people said.

Even the deal's endorsement by prominent shareholder advisory companies, like Institutional Shareholder Services, appears to have had less effect than the buyers and the board expected.

An adjournment is likely to prolong the gamesmanship that has taken hold over the fate of the computer maker, which agreed to sell itself to Michael S. Dell and the investment firm Silver Lake for $13.65 a share. By giving itself a few extra days, the committee is hoping to either persuade Mr. Dell and Silver Lake to raise their offer or declare that the current bid is best and final.

Since the transaction was announced, many investors have criticized the price as too cheap. That opposition eventually drew the support of Mr. Icahn, who has loudly decried the proposed bid and the ability of Mr. Dell to turn the company around.

Mr. Icahn and Southeastern have offered many alternatives, the most recent of which would have the company buy back 1.1 billion shares for $14 each and offer shareholders the right to buy stock at $20 each. That values Dell at $15.50 to $18 a share.

On Wednesday, Mr. Icahn needled the Dell directors who refused to endorse his proposal.

"I think most of these boards are completely dysfunctional," he said. "But I've never seen one as bad as this. I really mean it - where they actually go out and scare their own shareholders."

Advisers to both the Dell committee and would-be buyers believe that many investors are betting that additional pressure will force Mr. Dell to raise his group's bid. He caved once before, agreeing to concessions that raised the leveraged buyout offer to $13.65 a share from $13.60.

But people close to the buyers' group say no similar bump is likely. They note Dell's declining earnings, an increasingly dire outlook from analysts on the personal computer industry and the rising cost of debt financing.

By some calculations, a 25-cent increase in the offer could require about $400 million in new equity.

The Dell committee has sounded an alarm about what might happen to the company's shares if the buyout fails. Calculations by its investors estimate that Dell's shares could fall below $9 if the deal disappeared.

Dell's shares closed on Wednesday at $12.88, down more than 1 percent.

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Credit: Reuters/Chip East/Files

Investor Carl Icahn speaks at the Wall Street Journal Deals & Deal Makers conference at the New York Stock Exchange in this June 27, 2007 file photograph.

Dell shareholders are scheduled to vote Thursday on a plan laid out by Michael Dell and private equity firm Silver Lake to take the No. 3 PC maker private in a $24.4 billion deal.

However, Dell may decide to delay the vote to gain time to win support for the deal, a person familiar with the matter said on Tuesday.

In an open letter to shareholders on Wednesday, Icahn said Dell's special committee must allow a final vote to be completed on July 18, and not try to postpone the vote to a later date.

Icahn and Southeastern Asset Management oppose the offer, arguing that a $13.65 share offer "substantially" undervalues the company.

Michael Dell and Silver Lake would not raise their offer even if a vote on their offer were delayed, two people familiar with the matter said on Tuesday.

Dell shares were down 1.4 percent at $12.83.

(Reporting By Nicola Leske; Editing by Gerald E. McCormick)

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DALLAS * Dell Inc. is making a late push to win shareholder support for founder Michael Dell's plan to take the slumping computer maker private, an indication that Thursday's scheduled vote could be close.

Supporters of the $24.4 billion buyout offer believe Dell Inc. stands a better chance of turning around if it can make long-term strategic decisions without worrying about meeting Wall Street's quarter-to-quarter expectations. But some big investors have already signaled opposition to the bid. Activist investor Carl Icahn believes the offer undervalues the company.

The company's decision to go private is a reflection of the tough times facing the personal computer industry as people delay replacing traditional computers and spend their money instead on the latest smartphones and tablets. PC sales have been falling, and tablets are expected to outsell laptops this year.

CEO Michael Dell is hoping to evolve the company into a more diversified seller of technology services, business software and high-end computers - much the way IBM Corp. had successfully transformed itself in the 1990s.

Shareholders have until Thursday's meeting at the company's headquarters in Round Rock, Texas, to cast votes.

On Tuesday, a special committee of the company's board sent a letter to shareholders emphasizing its opposition to a rival plan by Icahn and his Southeastern Asset Management fund. Together, they own 13 percent of Dell.

The committee said Icahn could have trumped the $13.65-per-share offer from Michael Dell and his group of investors, but instead submitted a recapitalization plan that it called risky and short on details. Icahn's plan calls for rewarding shareholders with some cash now, but leaving about a third of the shares outstanding for shareholders to benefit from a successful turnaround.

"I believe it's a very, very close vote," said Patrick Moorhead, a technology analyst in Austin. "Institutional investors usually let a company know where they stand, so you can imagine a war room where (Dell advisers) are counting votes."

In corporate elections like this, shareholders can change their vote right up to the last minute. Michael Dell's task is made more difficult by an agreement that he would not cast his shares, which represent about 16 percent of the company's stock. That means the board needs slightly more than 42 percent of Dell's outstanding stock to accept Michael Dell's offer to get the deal done.

The company said Thursday's meeting could be called to order and then quickly adjourned without taking a formal vote to give the board more time to round up support for the buyout. If the vote is delayed, analysts say Michael Dell's group might even sweeten his offer.

In an open letter released Wednesday, Icahn called for a vote Thursday regardless of the outcome: "Can you imagine a political election contest where one side could push off the election to wait for a better day to hold the election - a date when it is hoped they might do better in the vote than they would have done on the originally scheduled election date?"

It would have been hard to imagine the company bearing Michael Dell's name facing this situation a decade ago, when it was riding high and leading the world in PC sales.

That was before the shift in how people engage with technology. Although the company has branched out into servers, storage devices and services, it is still heavily dependent on PCs and has suffered from the rise of smartphones and tablet computers. Last week, research firm IDC said worldwide PC shipments fell 11 percent in the April-June period, compared with a year earlier. That followed a 14 percent decline in the first three months of the year, the steepest quarterly drop since IDC started keeping records in 1994.

Dell shares have never recovered from their split-adjusted peak of nearly $60 during the dot-com boom in 2000. They were at a three-year high of around $18 in February 2012, when they started sliding again in the face of weakening PC shipments. Michael Dell began talking with potential partners about a private buyout even before the shares hit a low of $8.69 in November.

Rumors of a deal sent the shares higher before the board announced the agreement with Michael Dell and other investors on Feb. 5. A four-member special committee of the Dell board recommended that shareholders take the buyout, saying that it minimized their risk and gave them an all-cash payment at a premium over the share price before news of a possible deal leaked.

The committee said that it had wrangled six price increases from the group and that despite contacting dozens of other potential buyers, no superior offers emerged. One possible buyer, private equity firm Blackstone Group LP, dropped out in April, citing Dell's "rapidly eroding financial profile."

Icahn and Southeastern Asset Management have said that the buyout offer undervalues Dell, an opinion that has been echoed publicly by at least four more of Dell's top 20 shareholders. Icahn has proposed that the company buy back 1.1 billion shares at $14 each and added another element last week that will give stockholders warrants to buy additional shares. He has valued his plan at $15.50 to $18 per share. If Icahn and Southeastern succeed in defeating the private-buyout offer, they would seek to replace the Dell board - but haven't named their candidates - and put their own plan in effect.

Michael Dell's group got a boost when that offer was endorsed by three big shareholder-advising firms.

One of them, Glass, Lewis & Co., said it sympathized with those who believe the buyout offer was too low, "especially considering that many of the unhappy shareholders are long-term investors in Dell who likely purchased the stock at higher average prices" than $13.65. Still, the firm said, the certainty of a cash payout was better than the risk in continuing to hold Dell shares, which it said would fall "significantly" if the buyout is rejected - maybe by nearly half.

Dell's stock was trading at $12.81 midday Wednesday, below the $13.65 offered in the buyout. That's an indication that investors aren't holding out for a higher bid. Some analysts fear the stock will sink below $9 again if the deal with Michael Dell falls apart.

Michael Dell, the company's largest shareholder, is throwing in all of his stock and $750 million of his $16 billion fortune to help finance the sale to a group led by the investment firm Silver Lake. Dell's stock-and-cash contributions to the deal are valued at about $4.5 billion.

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The fate of Dell is far from certain and billionaire investor Carl Icahn has refused to drop his counteroffer.

Dell founder Michael Dell, left, and Carl Icahn, right. Carl Icahn penned an open letter to Dell stockholders urging them to get shares appraised before approving Michael Dell's $2.4 billion plan to take the computer maker private. (Photo: Virginia Mayo Mark Lennihan, AP)

SAN FRANCISCO -- The fate of PC manufacturer Dell as a public company bidding to go private is near some kind of resolution.

Dell shareholders are scheduled to vote Thursday on a sale of the company to an investment group including founder and CEO Michael Dell. But last-minute offers and other efforts by critics of the deal could derail the shareholder meeting.

Founder and CEO Michael Dell and Silver Lake Partners investing partners are offering to take the company private for $13.65 per share, or $24.4 billion. But so far, billionaire investor Carl Icahn, a vocal critic of the offer, has refused to drop his counteroffer.

The outcome is far from certain, experts say. On Monday, brokerage and shareholder T Rowe Price voiced its opposition of the Dell offer. And at the urging of Icahn, some shareholders are grousing that the offer undervalues Dell, hinting that they may balk at the vote in hopes of getting CEO Dell and his group to sweeten the bid.

Icahn and Southeastern Asset Management partners have offered $14 a share in cash plus one warrant for every four shares tendered. The warrant would give shareholders the right to buy one Dell share for $20 over the next seven years. In a letter to shareholders, Icahn valued his counteroffer at about $15.50 to $18 a share. Both offers would add substantial debt to Dell's balance sheet and require loans from private equity firms or major customers.

On Tuesday, a special committee of Dell's board tasked with evaluating the offers declined to endorse Icahn's latest proposal as superior. The committee does not accept Icahn's financing terms, which are conditioned on replacing Dell's board with Icahn and 11 others who work for Icahn and Southeastern.

"We wish to note that it is unfortunate Mr. Icahn continues to conduct his campaign by trying to discredit the special committee and accuse it of frightening Dell stockholders," the committee said Tuesday in a statement.

Icahn and his partners own a 13% stake in Dell. Under the terms of the Dell offer, the founder cannot use his shares -- a 16% stake -- in the shareholder vote. That means he and his partners need 42% of shareholders to approve their offer.

Since shareholders don't need to commit until the voting begins, Dell might delay Thursday's meeting, some Dell watchers said, and offer to sweeten their bid to ensure getting enough votes for approval.

Struggling PC maker Dell, based in Round Rock, Tex., has fallen victim to shrinking PC sales globally and failed to ride the mobile computing wave of the past few years. The founder says his proposal to take the company private would give it time away from meeting investor demands for short-term profit and allow for a dramatic overhaul aimed at developing data centers, services and software in a bid for higher margins.

However, "there hasn't been a compelling case that the current business strategy is wrong and an alternative is superior," said Jay Ritter, a professor of finance at the University of Florida, of the contentious proposals.

Last week, proxy advice firm Institutional Shareholder Services and two other major firms in that industry endorsed the buyout offer from Dell, who founded the company in 1984, and Silver Lake. Ritter says "a bidding war would result in a much higher price," if shareholders don't approve the offer on the table Thursday.

Shares of Dell fell 1% Wednesday to close at $12.88. Founder and CEO Dell owns about 16% of the company's shares. Under the deal, he would relinquish his publicly traded shares and throw in $750 million in cash (of his $16 billion fortune) to contribute about $4.5 billion to the offer.

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Carl Icahn

Not long ago, it seemed like billionaire investor Carl Icahn was isolated and defeated in his effort to kill the Michael Dell and Silver Lake $24.4 billion deal for Dell. The powerful Blackstone Group private equity firm dropped out of the race for the struggling PC maker and Icahn appeared to be having trouble getting the financing to mount a serious counter-proposal.

But on the eve of the shareholder vote on the Michael Dell buyout deal the number of major shareholders joining Icahn's team is growing and the effort to disrupt the deal looks increasingly credible. The special committee of Dell's board charged with evaluating what is in the best interest of shareholders, appears ready to delay the shareholder vote that is scheduled for Thursday in attempt to give Michael Dell more time to secure more shareholder support, maybe by increasing his bid for the company he founded. Michael Dell, however, has so far resisted efforts to get him to raise his offer for Dell.

In another sign that Michael Dell's deal is in trouble, Dell's stock keeps falling. Shares of Dell fell by 2% in Wednesday morning trading, changing hands for $12.76, their lowest since just after Michael Dell launched his effort to take the company private in January. Dell's stock is now down about 4% this week.

The latest big institutional investor to line up behind Icahn is Blackrock, which has a 4.4% stake in Dell. Other major shareholders standing in opposition to the deal are Icahn, Southeastern Asset Management, T. Rowe Price, Pzenza Investment Management and Yachtman Asset Management. In total, more than 20% of Dell's shareholders are openly voting against Michael Dell's buyout. The math increasingly is look tough for Michael Dell, given that he needs 42% of the shares outstanding to support his deal-the 16% of shares owned by Michael Dell and other insiders are not being counted and the shares of non-voting shareholders will be counted as no-votes.

Icahn has long maintained that Michael Dell is trying to buy the company on the cheap and that the PC maker is on the verge of a turnaround as it beings to offer new services to business clients. Instead, Icahn has proposed Dell launch a tender offer for 1.1 billion shares at $14 each and recently added a new warrant component that would give investors the chance to own more of the company and profit from any turnaround. Icahn chief teammate in opposing Michael Dell's deal, Southeastern Asset Management, recently pointed to the successful turnaround at Hewlett-Packard as a model for Dell.

The special committee of Dell's board does not like Icahn's counter-proposal to Michael Dell's deal, saying Icahn's idea required too much debt and uncertainty and that shareholders should just take the $13.65 a share Michael Dell and Silver Lake are offering.

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Dell offices in Santa Clara, Calif. (Photo: Paul Sakuma AP)

Investors watching personal computer maker Dell may have to wait another week to learn of the company's fate.

Citing "a person with direct knowledge of the situation," Bloomberg reports a Dell special committee overseeing buyout efforts may postpone a shareholder vote scheduled for Friday.

The reason? Dell is reportedly delaying the vote to snag a better bid or convince more shareholders to support an offer from CEO Michael Dell and Silver Lake Management for $24.4 billion.

Several shareholders have furiously opposed the plan, which could take Dell private. Last week, billionaire Carl Icahn, who owns a stake of Dell at nearly 9%, amended a counterproposal that would value Dell between $15.50 and $18 per share. The initial buyout plan from Dell goes for $13.65 per share.

Like many PC companies, Dell has struggled as more consumers shift away from desktops and laptops in favor of tablets and smartphones. Last quarter, Dell reported a 2% drop in revenue compared to last year.

Follow Brett Molina on Twitter: @bam923.

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On July 18th, when Dell ( DELL) shareholders vote on the offer by founder Michael Dell to take the company private for $24.4 billion, at stake is not just whether existing shareholders get their money's worth. The outcome also will determine whether Dell gets a shot at thriving in a post-PC era. The alternative is not pretty.

After Michael Dell's plan was made public in February, the board initiated a go-shop period that did not produce any credible alternatives. Public equity firm Blackstone raised its hand, but asked Dell for reimbursement of its due diligence costs. Dell granted the request with a $25 million cap in hopes that it would increase the chances of getting a superior offer. Blackstone ended its pursuit of Dell a month after it had begun.

Carl Icahn gets credit for being clever and persistent with his plan to reward existing shareholders. Icahn proposed using Dell's existing cash to pay a special dividend of $14 per share - 35 cents a share higher than the $13.65 per share being offered by Dell and his partners - then leveraging the company with new debt and leaving part of it publicly traded.

Existing shareholders might be happy with the Icahn plan. (By the way, I am not a Dell shareholder.) But it would leave Dell even less attractive to new and existing investors than it is now. Who wants to own stock in a public company going through a 3 to 5 year business transition burdened by sizeable new debt?

What's notable is not a single operating company stepped up to consider buying Dell. In other words, no one with the intention of tackling the business transformation challenge the company faces, with the goal of creating lasting value for customers and shareholders, was willing to do it.

Dell may be too big for a strategic buyer to acquire. But Dell is not too big to fail.

The Only Option

While it's going to be close, I believe that Dell shareholders ultimately will vote to accept Michael Dell's offer - and they should. Going private offers the company the best opportunity it has to create value for all parties involved over the long haul, including existing shareholders.

For starters, if after Thursday's vote Dell must continue as a public company, existing shareholders may face a precipitous stock dive. The stock might not go all the way down to its 52-week low of $8.69 per share, but certainly it would go lower than the $13.65 per share that is on the table with the Michael Dell deal.

In fact, uncertainty over the upcoming vote is already creating volatility in Dell's stock price. Monday's close was down 1 percent and today, Dell's stock fell 1 percent in early trading and briefly traded below $13 a share.

(Reports began circulating today that the vote might be postponed, which in my view would be a good thing.)

Long-Term Benefit

But more important, for Dell to make the leap from a PC products company to a solutions company - which it must do to survive - it must go private. Freed from Wall Street's insatiable appetite for short-term growth, Dell would be able to take the tough, but necessary, actions that could help accelerate its transition into new higher value and higher margin businesses.

Because the truth is this transition can't - and won't - happen overnight - even without the scrutiny of Wall Street. Consider IBM ( IBM). I compared IBM's spectacularly successful transition from a technology and sales leader to a global consulting powerhouse to what lies ahead for Dell when the deal was first announced earlier this year.

The IBM transformation started in 1993 and took a decade. Moreover, IBM had a head start. It already had a well-established software business and a much broader product line than Dell - from PCs to servers and mainframes.

And 2013 isn't 1993. IBM benefited from making the transition early in the game - before the decline of PCs in favor smartphones and tablets rocked the worlds of all the old-guard tech titans of 1980s, 1990s and early 2000s.

For proof of how much more challenging the world is today, look no further than HP ( HPQ). While making progress under the leadership of Meg Whitman, HP has struggled to adapt to changing market conditions. Just as Dell has spent $13 billion so far on acquisitions that have not produced results, HP has also invested billions in failed acquisitions. The purchase of Autonomy in the pre-Whitman era by HP for $8 billion is just one example.

Microsoft's ( MSFT) seismic strategy shift to becoming a devices and services company hasn't helped. To reshape its business for the future, Microsoft effectively blew up the partner ecosystem the company built and nurtured with Intel for decades. Companies like Dell and HP and thousands of other Microsoft partners became collateral damage.

Surviving the Post-PC Era

Meanwhile, market conditions are getting steadily worse. Gartner reported that PC shipments in the second quarter of 2013 were down 10.9 percent - the fifth consecutive quarter of declining shipments and the longest duration of decline in the PC market's history.

For a company such as Dell - whose core strengths are still PCs and servers - this is very bad news. If anyone had doubts before, it should now be obvious that Dell has no choice but to transform its business - or risk going out of business.

Key to making this transition is making large, strategic acquisitions that accelerate the transition. This need makes another strong argument for why Dell must go private. As a company with a broader product line about to get even broader, Dell competes with a number of companies that can probably "best it" when it comes to being an attractive buyer for a quality seller.

For example, today Dell is valued at about .35 times trailing 12 months (TTM) revenue. In comparison:

Technology solutions provider CDW (CDW) trades at 0.7 times (TTM) revenue Cloud services provider Rackspace (RAX) trades at 4 times (TTM) Server competitor IBM trades at 2.3 times (TTM) revenue Indian IT services company TCS trades at 4.1 times (TTM) revenue. Consulting firm Accenture (ACN) trades at 1.5 times (TTM) revenue.

The list goes on and on. As a public company, Dell likely would get beaten in any competition with any of these companies if both wanted the same asset.

But as a private company, Dell can make decisions that are good for the long-term prospects of the business - and have the leeway to execute on them - away from the public eye. Potential sellers (and partners, for that matter) might find Dell's progress appealing and agree to be acquired. The result could be a transformed business that even though a lot smaller, would have higher margins and rising value.

Of course, it remains to be seen whether Dell would be successful transforming its business. But in my view, the company's best bet is to be given the chance.

The alternative is for Dell to continue exploiting PCs - its declining core asset - which would probably force it into a price war with worldwide market share leader Lenovo.

And that's just a race to the bottom.

Marty Wolf is president and founder of martinwolf M&A Global Advisors. Marty has been involved in more than 115 IT M&A transactions during the last 16 years.

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Michael Dell and private equity firm Silver Lake are determined to hold steady and will not capitulate to pressure from Carl Icahn and other shareholders in the struggling computer maker Dell to raise their offer to take the company private in a leveraged buyout.

According to sources familiar with the most recent conversations held among the group of investors, Dell and Silver Lake are "prepared to see the deal blow up" rather than raise their bid of $13.65 a share.

The possibility that the buyout proposal will fail a vote of shareholders, still scheduled for Thursday morning, increased today as reports emerged that investment firm BlackRock made it known that it intends to vote against it. That makes more than 21 percent of shareholders publicly opposed to the deal, nearly half of the majority needed to approve it.

Michael Dell and Silver Lake are unwilling to raise their bid in light of the declining state of the company's PC-centric business. A failure of the buyout proposal would raise the prospect of a contentious and extended proxy fight for control of the company that could go on for months, an eventuality that Michael Dell is said to be prepared for, according to a person familiar with his thinking on the matter.

If the buyout deal collapses, Dell's special committee had argued that the share price, currently buoyed by the buyout offer price, would collapse and Dell would trade at a valuation more in line with that of Hewlett-Packard, which implies a share price for Dell of between $5.85 and $8.67 a share.

One key consideration, said a person familiar with the discussions, is that borrowing costs have gone up since Silver Lake first started the process of negotiating the terms of its offer with Dell's board of directors last year. The final bid of $13.65 a share came only after Michael Dell added some of his own shares in the company into the financing picture at a discount. Silver Lake already considered itself "tapped out" with its prior bid of $13.50, and is unwilling to revisit the terms of its debt financing package.

Michael Dell and Silver Lake are, as one source put it, "strongly aligned" in their unwillingness to raise their joint bid, even if the vote scheduled for Thursday is delayed.

On top of that is the collapse of the personal computer business from which Dell still derives roughly 70 percent of its revenue. Earlier this month, research firm Gartner reported that the global market for PCs declined by 11 percent from the year-ago period, marking a record fifth consecutive quarter of declines. The state of the market is declining faster than Silver Lake's initial models called for when the deal was first conceived.

Dell's profitability has declined considerably in the last year as the PC industry has contracted. In its most recent quarter, its earnings per share were seven cents, or more than 80 percent lower than the 36 cents in the year-ago period.

Another consideration is the fact that if the buyout is approved, Dell shareholders of record will receive their regular quarterly dividend payment of eight cents a share. This plus two previous quarterly dividends paid after earlier quarters raises the total payouts by the company to shareholders of record to $13.89 if the deal doesn't close before Sept. 26. Sources expect the buyout, if approved, won't close before October.

Dell shares closed down 13 cents, or nearly one percent, to $13.02 during the regular session and fell further after hours to $13 even.

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Credit: Reuters/Bobby Yip

A company logo of Dell is seen on the cover of its laptop at a Dell outlet in Hong Kong October October 21, 2009.

Dell may decide to delay a shareholder vote scheduled for Thursday, July 18, on the offer as the company's special board committee now sees the outcome as too close to call, a person familiar with the matter said earlier on Tuesday.

With a nearly 16 percent stake in Dell and ties going back three decades to the creation of the company out of his college dorm room, Michael Dell is seen as having much more at stake in the deal going through than Silver Lake, a financial investor that often walks away from deals it deems to make no sense.

But the two people with knowledge of Michael Dell's and Silver Lake's plans said on Tuesday that any decision to increase the offer would be taken jointly and that both parties have decided there will not be any bump in their $13.65 per share offer.

The people asked not to be identified because their deliberations are private. Spokespeople for Dell and its special board committee did not immediately respond to requests for comment. Silver Lake declined to comment.

(Reporting by Greg Roumeliotis in New York)

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Facing lingering shareholder resistance, Dell's ( DELL) special committee is reportedly mulling pushing back the July 18 shareholder vote on Michael Dell's $24.4 billion leveraged buyout of the slumping PC maker.

By delaying the vote, Dell would be signaling it may not have the votes to approve the controversial transaction, which has been opposed by major investors such as billionaire Carl Icahn.

According to Bloomberg News, the special committee running the buyout process is considering a delay.

The committee is likely to make a decision by the morning of the vote if the votes already cast against the transaction are enough to reject it, Bloomberg reported.

A spokesman from the special committee didn't immediately respond to a request for comment.

By calling off the shareholder vote, Dell could gain extra time to convince investors to switch their vote or even for Michael Dell and private-equity firm Silver Lake Partners to sweeten their $13.65-a-share offer.

In addition to a vocal campaign by legendary corporate raider Icahn, the Dell buyout has faced opposition from other major shareholders.

On Monday, T. Rowe Price ( TROW), which held a 4.4% stake in Dell as of March 31, said it will be voting against the current offer.

"We continue to believe the proposed buyout does not reflect the value of Dell and we do not intend to support the offer as put forward," Brian Rogers, T. Rowe's chairman and chief investment officer, said in a statement.

The shareholder vote is complicated by the fact that Michael Dell's 16% stake in the company won't be eligible to vote because he is the buyer.

Excluding the votes of Michael Dell and other corporate insiders, owners of at least 42% of the company's stock must vote in favor of the deal, but investors holding at least 19% of Dell stock as of March 31 have already opposed it, according to The Wall Street Journal.

Icahn, who has proposed a tender offer for 1.1 billion Dell shares at $14 each, accused the company on Monday of deploying "scare tactics" to spook investors into approving the deal.

Shares of Round Rock, Texas-based Dell retreated on the talk of a delayed vote, falling 1.22% to $12.99 in recent trading.

Follow Matt Egan on Twitter @MattMEgan5

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Summary: If you're itching for Dell shareholders to just make up their minds already, you're probably going to have to wait even longer now.

Dell shareholders were scheduled to make a decision once and for all on July 18 about whether or not the PC company should revert to a private operation.

Looks like this soap opera is not going to be canceled just yet.

According to Bloomberg, the special committee set up at Dell to resolve this matter is supposedly planning to delay the vote in order to swing support toward CEO Michael Dell's $24.4 billion proposal.

The possible delay follows a move by prominent Dell investor Carl Icahn last week in which the American business magnate dropped hints touting his new proposal to Michael Dell's plans once again.

Icahn's latest suggestion outlined that Dell would self tender 1.1 billion shares of stock for $14 a share plus one transferable warrant for every four shares purchased.

These warrants would allow shareholders to purchase a share of Dell for $20 for seven years. Should Dell shares be worth more than $20, the idea is that these shareholders would benefit.

Here's a quick recap of where things have stood up until early July as company executives fight over whether Dell should revert to operating as a private company.

As of June 5, the Round Rock, Texas-based corporation had two options on the table:

Blackstone was previously involved in the mix, but later dropped out amid the global PC market meltdown.

There have been debates back and forth over whether Michael Dell and company should raise their initial $24.4 billion offer.

Icahn tried requesting a meeting with Dell's special committee on the matter after lining up approximately $5.2 billion in loans to back his alternative buyout bid.

However, the special committee rejected Icahn's bid as "inconsistent".

Concurring with Silver Lake, top proxy advisory firm Institutional Shareholder Services backed the CEO's plan earlier this week.

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Billioanire activist investor, Wall Street's richest man, Carl Icahn.

Billionaire investor Carl Icahn, with his trademark brashness, this morning worked to debunk objections to his leveraged recapitalization proposal for Dell , the latest volley by Icahn against the PC maker's board.

In a new letter to shareholders, Icahn foremost renews his argument that the computer company is deliberately sabotaging itself, to create the appearance that the business is deteriorating in a way that would make investors more likely to take the easy route out and accept the $24.4 billion, $13.65 a share, management-led buyout. At the same time, Icahn is offering a $14-a-share buyback program, along with a warrant that would allow investors who stick around to buy more shares (once the stock goes higher).

Another issue that Icahn addressed is the idea that his leveraged recap would take too long. A prominent proxy adviser firm last week choose the management buyout, in which Dell would sell itself to its billionaire founder Michael Dell and private equity shop Silver Lake Partners, rather than Icahn's idea primarily because it fears the leveraged recap would prolong the comeback that Dell needs. Dell is struggling to compete in a tech world characterized more by Apple 's iPad and Amazon.com 's Cloud than any desktop computer.

If Icahn's plan worked, shareholders would scuttle this week's vote on the management buyout, and then Icahn would need them to vote for his slate of directors at the upcoming annual meeting. Dell directors say the period between the buyout vote and the meeting is too protracted and risks further decline at Dell. Icahn has examined the proxy, and finds that the board must call an annual meeting by Aug. 14, meaning the gap between the vote and the meeting is considerably shorter than investors might think.

As for whether his proposed directors might lose, Icahn says, "This is nonsense because it makes no sense to believe stockholders will vote to elect the current board with their abysmal record and turn down our recap offer."

Ultimately, the battle between Icahn and Dell will come to an end this week, a conclusion to one of the more bruising, and entertaining, war of words waged recently in corporate America.

Reach Abram Brown at abrown@forbes.com.

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A high-stakes game of poker is now being played over the fate of Dell Inc., less than 36 hours before shareholders are scheduled to vote on the computer company's proposed $24.4 billion sale to its founder.

A special committee of Dell's board is poised to adjourn the vote on Thursday morning because it is concerned that the offer may be defeated by shareholders, people briefed on the matter said on Tuesday. The directors have signaled for days that they would rather postpone the shareholder meeting, giving them time to either elicit a higher bid from Michael S. Dell and his partner, the investment firm Silver Lake - or get the buyers to declare their current offer of $13.65 best and final.

Meanwhile, Mr. Dell and Silver Lake are working behind the scenes to convince shareholders that they will not raise their current offer and are prepared to walk away.

The jockeying comes amid more signs that the deal faces stiff investor opposition. BlackRock, which owns a nearly 4.5 percent stake, has voted no, according to one of the people briefed on the matter. And the mutual fund manager T. Rowe Price, which owns a 4 percent stake, said publicly on Monday that it remained opposed to the deal.

The primary opponents to the leveraged buyout, the billionaire activist Carl C. Icahn and the asset management firm Southeastern Asset Management, have pressed their argument that the proposed sale would shortchange investors. They contend that their plan, in which the company would buy back 1.1 billion shares for $14 apiece, would deliver more to fellow shareholders while letting them participate in any revival of the computer company.

In a letter to investors sent on Tuesday, the Dell special committee again sought to rebut Mr. Icahn's claims, arguing that a so-called leveraged recapitalization would leave shareholders owning stakes in a more indebted company. Moreover, Mr. Icahn's offer requires investors completely replacing Dell's board with the activist's own slate of candidates.

Still, the directors remain pessimistic because of the tough threshold for approval of Mr. Dell's deal. More than 42 percent of the company's shares must be voted in favor of the transaction. More than 21 percent of Dell's shares - including the roughly 13 percent stake held by Mr. Icahn and Southeastern - is currently arrayed against the proposal, this person said.

By briefly opening the shareholder meeting and then adjourning, the special committee buys more time to twist arms. The maneuver will let the company maintain the current record date of June 3, the day by which investors must have owned shares to participate in the vote. (That said, Dell directors may be ultimately fine with moving the date.)

Both the special committee and the buyer group believe that many of Dell's shareholders are wagering that Mr. Dell and Silver Lake will blink and raise their offer. By some estimates, nearly one-quarter of Dell shares held as of June 3 are now in the hands of arbitrageurs, who bet on the outcome of mergers.

But people close to the would-be buyers argue that there is less incentive than ever for the consortium to increase their bid, pointing to the company's declining earnings; increasingly negative analyst outlooks on sales of personal computers; and the rising cost of debt borrowing.

As recently as last week, the research firm Gartner estimated that worldwide PC shipments had fallen from the year-ago period by roughly 11 percent, to 76 million units. That is the fifth consecutive quarter of falling sales.

Meanwhile, raising the offer above $13.65 a share could prove expensive. A 25-cent increase of the bid would require an additional $1 billion in new equity, hurting the potential return of Mr. Dell and Silver Lake.

Any bump in price would need the approval of both partners, even as many shareholders are hoping that the company founder would succumb to pressure and make additional concessions to allow a rise in price.

Shares in Dell closed on Tuesday at $13.02, down almost 1 percent.

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