Associated PressDell founder Michael Dell, left, and investor Carl Icahn, are going to head-to-head on the future of the computer company.
WILMINGTON, Del.—A corporate law judge Friday denied fast-track treatment to investor Carl Icahn's challenge to a nearly $25 billion buyout offer for Dell Inc., finding there was "no colorable" claim a looming shareholder vote was rigged.
The ruling clears the way for a Sept. 12 vote on the buyout offer from Michael Dell and private-equity firm Silver Lake that would take the computer company private.
Chancellor Leo Strine all but threw out Mr. Icahn's argument's that the special committee of Dell's board has unfairly steered shareholders to vote in favor of the buyout offer and against his competing proposal, which would keep Dell a public company.
If Mr. Icahn wants to beat Mr. Dell and Silver Lake head-to-head, the judge said, he has to top their bid.
"I think the special committee would dance in the streets if the Icahn group would make a topping bid that was firmly financed and would buy out everybody's shares at a greater price," Chancellor Strine said.
Mr. Icahn wasn't immediately available for comment.
Dell has set an Oct. 17 date for the annual meeting where Mr. Icahn will try to oust the board, and replace it with directors sympathetic to his idea for Dell. Mr. Icahn wants Dell to distribute cash to shareholders through a dividend, allowing those who want to exit the investment to leave, while others to enjoy the upside of a Dell revival.
In a lawsuit, Mr. Icahn accused Dell's board of breaching fiduciary duties by putting Mr. Dell's buyout offer to a shareholder vote before his proposal to have the company pay out a dividend can be considered. He wanted simultaneous votes on the rival plans for Dell's future.
"I don't find any color to the fiduciary duty claim or any threat of irreparable injury that justifies expediting those claims," Chancellor Strine said at a hearing in Delaware's Court of Chancery.
Failure to win fast-track treatment for most of the lawsuit leaves Mr. Icahn with little hope the influential corporate law court will upset Dell's deal with its founder.
There is no proof Dell shareholders are being coerced, the judge said. Those who don't like Mr. Dell's offer can vote it down in September, and take their chances in October, when Mr. Icahn will try to oust the company's board and push his own deal across, the judge said.
Mr. Icahn accused Dell of attempting to disenfranchise the Dell shareholders by changing the voting rules, moving up the record date and altering the tallying standard, in exchange for a $350 million improvement in Mr. Dell's offer. Those changes, the judge said, don't "create any colorable claim of wrongdoing."
A dozen investors dispatched representatives to Friday's session in Delaware's Court of Chancery, to get a sense of whether Mr. Icahn's legal case poses a real impediment to the buyout offer from Mr. Dell and Silver Lake.
They found out that it doesn't. Investors are "sick of Icahn," said one observer, who didn't want to be named.
In June, Chancellor Strine stopped a shareholder class action complaining about the buyout dead in its tracks by refusing to grant speedy handling.
Chancellor Strine said he would grant speedy hearing to Mr. Icahn's arguments that Dell improperly delayed its annual meeting, because he felt compelled to do so because the contention was based in a statute. That argument, however, is also likely to end in defeat for Mr. Icahn, the judge said, indicating that, even if Mr. Icahn wins that part of the case, the remedy will be a court order setting the annual meeting date on Oct. 17, exactly where Dell has it now.
