M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

Thursday, July 18, 2013

Dell adjournment

OK, so the Dell board adjourned today's meeting rather than face the indignity of having to announce to the world that Icahn had won this battle and that it had come up 150 million votes short.  So, now the board has until July 24th to round up as many of non-votes as possible to get over the hump.  Remember that courts when asked to review a board decision to adjourn a shareholder meeting to round up more votes in favor of their preferred transaction will rely on the business judgment standard.  So, it's deferential of board actions - short of coercion or improper vote buying boards are permitted to adjourn in this manner.

What might coercion or improper vote buying look like?  Well, I invite you to jump into the Way-Back Machine to 2002 and the HP-Compaq merger.  Sensing that HP shareholders wouldn't vote in favor of the controversial merger, Fiorina organized a conference call with DB bankers and their asset management group (that had just voted against the deal) to discuss DB's continuing relationship with HP.  During the call, Fiorina said, “This is obviously of great importance to us as a company. It is of great importance to our ongoing relationship.”  

An executive from DB on the call then reminded the asset management folks that HP is an “enormous” customer and then tells them they would have to defend a “no” vote to the highest levels of the bank. According to the transcript the DB executive said to the team, “Obviously, if you don’t want to change your vote, that’s your call.  I would suggest to you — and I’m not trying to put undue pressure — but make sure that you have a very strong documented rationale for why you voted the way you did.”

After the call DB changed enough votes to help the merger pass.

Good times, good times. 



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