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Lawsuit against Dell

Lawsuit against Dell

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Published by DealBook
Carl C. Icahn's lawsuit against Dell, seeking to prevent the company and its board from altering terms of a scheduled vote on a proposed $24.4 billion buyout.
Carl C. Icahn's lawsuit against Dell, seeking to prevent the company and its board from altering terms of a scheduled vote on a proposed $24.4 billion buyout.

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Categories:Types, Business/Law
Published by: DealBook on Aug 01, 2013
Copyright:Attribution Non-commercial

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10/12/2013

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EFHed:
Aug
01201301:16P,
Transaction
ID
53359611
Case
No.
8762-
IN
THECOURT
OF
CHANCERY
OF
THE
STATE
OF
DELAWARE
HIGH
RIVER
LIMITEDPARTNERSHIP,
ICAHN
PARTNERS,
LP,
ICAHN
PARTNERS
MASTER
FUND,LP,ICAHNPARTNERS
MASTERFUND
II,LP,and
ICAHNPARTNERSMASTERFUNDIIILP,
Plaintiffs,
DELL
INC.,
MICHAEL
DELL,JAMES
W.
BREYER,
DONALD
J.
CARTY,
JANET
F.
CLARK,
LAURA
CONIGLIARO,
KENNETH
M.
DUBERSTEIN,WILLIAM
H.
GRAY,III,GERARDJ.KLEISTERLEE,
KLAUSS.LUFT,
ALEX
J.
MANDL,
SHANTANUNARAYEN,
and
ROSS
PEROT,
JR.,
Defendants.
C.A.
No.
VERIFIED
COMPLAINT
PlaintiffsHighRiverLimitedPartnership,IcahnPartners,LP,IcahnPartners
MasterFund,LP,IcahnPartnersMasterFundII,LP,andIcahnPartnersMaster
Fund
III,
LP(collectively,the"IcahnParties"),byandthroughtheirundersignedcounsel,allege
uponknowledgeastothemselvesanduponinformationand
belief
astoallothermatters,
asfollows:
 
NATURE
OF
THE
ACTION
1.DellInc.("Dell"orthe"Company")isincrisis.Thelame-duckboard
of
directors
of
Dellhasbeeninofficeforoverayear,buttheboardhasrepeatedlyrefusedto
holdanannualmeeting
of
stockholderstoallowthemtodecidewhoshouldrunthe
Companyatthiscriticaltime.Insteadthedirectorshavebeenusingtheirwaning
incumbencytotrytoramthroughagoing-privatetransactionproposal
by
MichaelDell
andhisassociatestoacquiretheCompany(the"Merger"),eventhoughthatMergerhasrepeatedlyfailedtogainthenecessarystockholdervoteforapproval.Moreover,by
refusingtocallanannualmeeting,thedirectorsaredeliberatelypreventingthe
stockholdersfromvotingtoremovethemandelectinganalternativeandsuperior
proposalmade
by
Plaintiffsandothers—aleveragedrecapitalization
of
theCompany.
2.TheboardhastakenfurtheractiontohelpMr.Dellwhilestillfailingtocall
anannualmeeting.Ithastwiceadjournedthespecialmeeting
of
stockholderscalledtovoteontheMerger(the"SpecialMeeting"),becauseeachtimethestockholdershadvotedtorejecttheMerger.Thenitofferedtoresettherecorddateforthemeetinginexchangefora10centbumpfromMr.DellandSilverLake.Accordingtopressreports,
Mr.Dellandtheboardhavenowagreedtochangetherecorddate
of
theSpecialMeeting.
AchangeinrecorddatewouldbedesignedtogiveMr.Dellachancetofinallywinthe
votebecausetheboardhadpreviouslytakenstepsthatchangedthestockholderbaseafter
 
theoriginalJune3
record
datebychasingawaylong-termholderswhoopposedthe
Mergerandreplacingthemwitharbitrageurswhowerefarmorelikelytoacceptit.
3.ThecurrentrecorddateJune3,2013,whichwassetinlateMay—isfar
fromstale,particularlysincetheMergerwasapproved
by
theboardinearly
February.
But,achangeinrecorddatecouldbedispositivebecausefromthemiddle
of
Juneonward
theboardandMr.Dell,facedwithmassivestockholderresistancetotheMerger,engaged
inaconcertedefforttoconvincelong-termstockholderswhoopposetheMergerthatDell
is
facing
enormouseconomicheadwindsandthatthemarketvalue
of
theCompany's
stockwillfall
off
a
cliff
if
theMergerisvoteddown.Part
of
thepurpose
of
these
presentationswastocausetheanti-Mergerstockholderstoselltheirshareswiththeknowledgethat
many
of
thoseshareswouldbebought
by
arbitrageurs
who
couldbecountedontosupporttheMerger
if
therecorddatewasreset.4.Thatcampaignhasbeendeeplycynical.ImmediatelyaftertheMergeris
approved
by
stockholders,the
Company
andits
investment
bankers
will
be
tryingto
syndicatethefinancingnecessarytoconsummatethe
highly
leveragedMerger,andthere
isnopossibilitythattheCompanywillbetellingdebtinvestorsthatthe
sky
isfalling.
Indeed,thePowerPointpresentationsshowingthattheCompanycaneasilyshoulderthe
new
acquisitiondebt
of
$15.75billionmustalreadybedraftedandrestingintheservers
andharddrives
of
both
Dellanditsinvestmentbankers,
where
they
coexist
uneasily
with

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