advisory firm recommended the PC maker's shareholders approve a
founder-led deal to take the company private.
Founder Michael Dell and Silver Lake Partners investing firm are
offering to buy Round Rock, Tex.-based Dell for $13.65 per share, or a
total of $24.4 billion.
In a report out over the weekend, Institutional Shareholder Services,
a corporate governance advisory firm, pointed to the offer's hefty
premium, a 26% premium to the share price when the offer was made, and
the benefits that come with an all-cash financed bid.
Michael Dell is trying to buy the company he founded at a "bargain
price," Carl Icahn, billionaire investor and Dell's second-largest
shareholder said late Sunday.
Icahn reiterated the benefits of his counter offer that would keep
about 40% of the company's shares publicly traded. He is offering $14
a share to buy about $16 billion worth of Dell stock and would finance
the deal by significantly adding to Dell's debt load.
The plan of Icahn and Southeastern Asset Management to buy back up to
1.1 billion Dell shares at $14 each would be funded with $5.2 billion
in debt, $7.5 billion in Dell's cash on hand and $2.9 billion from the
sale of Dell receivables. Icahn has said he and his affiliates have $5
billion in existing equity and proposed debt financing to help fund
their proposal.
Michael Dell says he can turn his beleaguered company around by taking
it private and diversifying into niches, such as business software,
data storage and consulting. The company's board backs Michael Dell's
proposal and has expressed concerns about Icahn's financing.
Shareholders are scheduled to vote on the buyout offer at the
company's annual meeting on July 18. The ISS report said that if
shareholders reject the Dell offer, they should be willing to hold
Dell shares, which may get hit as the company continues to transform
itself amid the deteriorating PC industry.
A special committee of Dell's board evaluating the company's options
said in a statement that it was pleased with the recommendation,
noting that it believes not going forward with the sale would expose
the company and its shareholders to "serious risks" that would further
reduce the company's value.
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