CEO Michael Dell and Silver Lake Partners have sweetened the terms of a buyout bid for the founder’s namesake PC company, forging a revised offer agreement with the special committee of Dell’s board in the face of legal opposition by billionaire investor Carl Icahn.
In a statement released Friday, Dell says the new deal boosts the purchase price to $13.75 a share, and a special dividend of 13 cents per share when the deal is closed.
As part of the deal, Dell’s special committee changed a voting rule that requires”approval by the majority of disinterested shares actually voting on the matter.” Under the original guidelines, abstentions counted as a “no” vote.
“The Committee is pleased to have negotiated this transaction, which provides as much as $470 million of increased value, including the next quarterly dividend that will now be paid regardless of when the transaction closes,” says special committee chairman Alex Mandl in a statement.
Dell has moved up the record date for the deal to August 13, allowing shareholders who own stock as of that date to vote. A scheduled shareholder meeting to vote on the deal has been moved to September 12. shares are up 5% in early trading.
Brian Quinn, associate law professor at Boston College, expects the deal to go through, even with continued challenges from longtime opponents Carl Icahn and Southeastern Asset Management.
“The special dividend and the quarterly dividend provides existing shareholders an opportunity to take some cash out … before they hand over the company to Silver Lake,” he says.
The deal is the latest in the ongoing battle over the future of the world’s third-largest PC maker. Last week, Michael Dell and Silver Lake offered a “final” proposal at $13.75 a share, so long as Dell excluded abstentions — which count as “no” votes — from the shareholder voting tally. In a letter issued Wednesday, Dell’s special committee had rejected the amendment, but offered to consider the higher bid.
Meanwhile, billionaire investor Carl Icahn and investment management firm Southeastern Asset Management continue their efforts to thwart a buyout plan they see as “undervalued.” In a letter on Monday, Icahn and Southeastern urged shareholders to “let the desperate Dell debacle die.”
Icahn also filed a lawsuit in a Delaware court attempting to block Dell from setting a new record date for the shareholders’ vote, which takes place today.
The longer the buyout saga plays out, the longer it takes Dell to begin its plan for a turnaround, as it and other personal computer makers continue to struggle while more consumers ditch home computers in favor of smartphones and tablets.
