News Column

Dell Board OK's Michael Dell Buyout Offer

June 5, 2013

Tom Murphy

Dell Inc.'s board said that a takeover bid led by the company's founder and CEO is in the best interest of the slumping PC maker's shareholders and asked them to approve the deal when it's put to a vote in July.

The Round Rock, Texas, company's announcement Friday amounts to the latest volley in a battle with prominent shareholders over the company's future and Michael Dell's role in it.

Dell directors unanimously recommended an offer from Michael Dell and the investment firm Silver Lake Partners to take the company private for $24.4 billion, or $13.65 per share, according to filings with the U.S. Securities and Exchange Commission.

A board special committee told shareholders in an open letter Friday that Michael Dell's option was the best alternative, and that it offered certainty and "a very material premium" in a challenging business environment. It noted that the $13.65 per share price represented a premium of about 37 percent over the stock's average closing price in the months before rumors about a potential deal surfaced.

But billionaire investor Carl Icahn and Memphis-based Southeastern Asset Management, Dell's largest independent shareholder, contend the price is too low.

Southeastern and Icahn pitched an alternative that would let Dell shareholders keep their stake in the company and give them either $12 per share in cash or additional shares.

The board's special committee has said that it needs more information on that deal.

It also said Friday that shareholders would retain substantial risks if the company took on debt to afford a special payout, a process known as "leveraged recapitalization." With the buyout, the risk shifts to the parties buying the company.

Icahn and Southeastern own more than 12 percent of Dell shares combined, a total that trails only Michael Dell. They have said they will work to convince other Dell shareholders to reject the Michael Dell buyout. Icahn also has said Michael Dell would no longer be running the company if his proposal won out.

Icahn has nominated himself and 11 other candidates for spots on Dell's board. But the company hasn't scheduled an annual meeting at which it will elect directors. The board said Friday it may not do that if shareholders vote for the buyout at the July 18 special meeting, scheduled in the Round Rock, Texas, headquarters.

Southeastern issued a statement Friday saying it is urging Dell shareholders to refuse the board's proposal.

Originally published by Tom Murphy Associated Press.

(c) 2013 Commercial Appeal, The. Provided by ProQuest LLC. All rights Reserved.




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