Dell board recommends Michael Dell buyout offer (Update)

May 31, 2013 by Tom Murphy

The Dell board is standing behind a buyout offer from the company's CEO and founder, and has asked shareholders of the slumping PC maker to approve the deal in a July 18 vote.

The company's announcement Friday is 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 Securities and Exchange Commission.

A board special committee told shareholders in an open letter Friday that Michael Dell's plan was the best option, and that it offered certainty and "a very material premium" in a challenging business environment. It noted that the 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 has said that price amounted to a giveaway. Icahn and Southeastern Asset Management, Dell's largest independent shareholder, pitched an alternative plan earlier this month that would let Dell shareholders keep their stake in the company and give them either $12 per share in cash or additional shares.

The committee has said that it needs more information on that deal.

The committee also said Friday that shareholders would face substantial risks if the company took on debt to pay for 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 has nominated himself and 11 other candidates for spots on Dell's board and has said Michael Dell will no longer be running the company if his nominees gain seats. 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 special meeting, which will be held at the company's headquarters.

Neither Icahn nor Southeastern returned calls from The Associated Press on Friday.

The special committee formed last August after Michael Dell told the board he was considering taking the company private. It said it negotiated six price increases with Michael Dell, who made the buyout offer with the investment firm Silver Lake Partners. The committee said it also contacted 21 strategic and 52 financial buyers, but a superior offer did not materialize.

Dell Inc. and other personal computer makers have seen sales crumble because of the growing popularity of smartphones and tablets. Earlier this month, Dell posted a 79 percent decline in earnings for the most recent quarter.

Michael Dell believes he can turn the company around by taking it private and diversifying into niches, such as business software, data storage and consulting.

Shares of Dell, based in Round Rock, Texas, climbed 12 cents to $13.39 Friday afternoon while boarder trading indexes also rose slightly. The stock has already climbed more than 31 percent this year.

Explore further: China's Xiaomi raises more than $1 bn in funding

1 /5 (1 vote)
add to favorites email to friend print save as pdf

Related Stories

Dell board committee seeks info on investor plan

May 13, 2013

Dell board members say they need more details from investor Carl Icahn if he wants them to seriously consider his latest challenge to Michael Dell's $24.4 billion plan to take the computer maker private.

Investors challenge Dell takeover plan (Update)

May 10, 2013

Dell's largest independent shareholder has teamed with activist investor Carl Icahn in another challenge to founder Michael Dell's $24.4 billion bid to take the struggling computer maker private.

Dell, Icahn agree on a share ownership cap (Update)

Apr 16, 2013

Dell Inc. and Carl Icahn have agreed to cap his stake in the personal computer maker while a special board committee considers competing takeover bids from the billionaire investor, a group led by CEO Michael ...

Icahn signs confidentiality agreement with Dell (Update)

Mar 11, 2013

Billionaire investor Carl Icahn, who is fighting Dell Inc. founder Michael Dell's plan to take the struggling company private, has entered a confidentiality agreement that would give him access to the computer maker's financial ...

Recommended for you

As dust clears, what's next for Sony?

1 hour ago

The Sony hacking attack continues to deliver more dramatic plotlines than any fictional movie, but meanwhile the movie studio must move forward and tackle the next steps in minimizing the mess. Will Sony ...

It's down to the wire for online shopping

4 hours ago

As the holiday shopping season winds down, FedEx, UPS and online retailers are using the last few days to try to avoid the problems that occurred last year when severe winter weather and a surge in late orders ...

China's Xiaomi raises more than $1 bn in funding

Dec 21, 2014

China's top smartphone seller Xiaomi Corp. is raising more than $1 billion in a fresh round of funding, a move which would raise its valuation above $45 billion, a report said Sunday.

Why the Sony hack isn't big news in Japan

Dec 20, 2014

Japan's biggest newspaper, Yomiuri Shimbun, featured a story about Sony Corp. on its website Friday. It wasn't about hacking. It was about the company's struggling tablet business.

Sony faces 4th ex-employee lawsuit over hack

Dec 20, 2014

A former director of technology for Sony Pictures Entertainment has sued the company over the data breach that resulted in the online posting of his private financial and personal information.

Sony tells AFP it still plans movie release

Dec 20, 2014

Sony Pictures boss Michael Lynton denied Friday the Hollywood studio has "caved" by canceling the release of "The Interview," and said it still hoped to release the controversial film.

User comments : 0

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.