Judge’s Ruling Removes Hurdles to a Dell Takeover Bid

Updated, 6:03 p.m. | A Delaware judge on Friday denied a bid by Carl C. Icahn to derail a vote on a nearly $25 billion takeover bid for Dell Inc., dealing a blow to his fight against the buyout offer.

During the hearing, Chancellor Leo Strine of Delaware’s Court of Chancery repeatedly rebuffed suggestions by Mr. Icahn that a special committee of Dell’s board improperly favored the deal proposed by the company’s founder, Michael S. Dell, and the investment firm Silver Lake.

His ruling means that the takeover bid will proceed toward a shareholder vote scheduled for Sept. 12. Investors will have the chance to vote on the buyout bid of $13.88 a share, an improvement on the original offer of $13.65 a share.

Dell shareholders will also vote on the company’s board at an annual meeting on Oct. 17, though that would most likely be irrelevant if the deal is approved.

“As a result of today’s court ruling, we remain on course for a Sept. 12 shareholder vote on the pending buyout transaction,” a spokesman for Dell, David Frink, said in statement.

Mr. Icahn said in a telephone interview that he believed bidding rules set up by Dell’s special committee hamstrung his ability to effectively compete against the company’s founder. Still, he was resolute that he had done the right thing for shareholders.

“I believe I made a competing bid that was superior. I am obviously disappointed that the judge didn’t see it that way,” Mr. Icahn said. “But we did get $350 million more from Michael Dell for shareholders. We did the work the board should have done.”

Shares in Dell rose slightly on Friday, to $13.82.

Mr. Icahn had sued Dell in the Delaware court, hoping that Chancellor Strine would stymie the vote on the takeover bid. Mr. Icahn was also seeking to move up the company’s annual meeting, potentially aiding his effort to replace the company’s entire board.

Before the hearing, Mr. Icahn and Southeastern Asset Management filed a preliminary proxy statement that reiterated their effort to replace Dell’s board. Among the candidates are Mr. Icahn; A. B. Krongard, a former executive director of the Central Intelligence Agency; and Rahul N. Merchant, the chief information officer for New York City.

But during the hearing, Chancellor Strine skipped oral arguments and repeatedly criticized Mr. Icahn’s contention that the special committee favored the approach by Mr. Dell over a competing proposal from Mr. Icahn. The judge said that Mr. Icahn’s plan, a big stock buyback that he has offered to help finance, wasn’t firm enough. Still, he remains free to improve his offer.

Mr. Icahn and Southeastern had also sought to nullify a decision by the Dell special committee to change both the voting requirements of the proposed sale and its record date, both meant to ease the chances that the deal will succeed.

Instead of requiring a majority of all independent shares to be voted in favor of Mr. Dell’s takeover, the special committee will now accept a majority of shares voted, meaning that shares not voted will not be counted as “no” votes. The committee also moved the record date, the day by which shareholders must have held shares to qualify to vote on the deal, to Aug. 13 from June 3, which would let in more shareholders considered likely to vote in favor of the transaction.

Dell’s board has argued that the moves were meant to secure the best possible outcome for the company’s shareholders. In exchange for the concessions, Mr. Dell and Silver Lake agreed in early August to raise their bid to $13.75 a share plus a special dividend of 13 cents a share, for a total of $13.88 a share.

Chancellor Strine sided decisively with the company’s board.

Mr. Icahn and Southeastern had also argued that the Oct. 17 annual meeting date violated Delaware law because it is more than 13 months after the previous meeting.

Chancellor Strine said that while Delaware law generally required annual meetings to be held within 13 months of the previous one — Dell’s last meeting was in July 2012 — Oct. 17 was approximately the date that he would have set anyway.