The special committee of Dell’s board of directors said Thursday that it has received a revised proposal from Michael Dell and global technology investment firm Silver Lake under which they would increase the price at which they would acquire the company to $13.75 per share in cash, subject to certain conditions. The board continues to demand $14 per share from the group seeking buyout of Dell.
In light of the revised proposal, which the special committee is evaluating with the assistance of its financial and legal advisors, the special meeting of stockholders will be adjourned to August 2, 2013. Previously, Dell stockholders were supposed to receive $13.65 in cash for each share of Dell common stock they hold, in a transaction valued at approximately $24.4 billion. The price represents a premium of 25% over Dell’s closing share price of $10.88 on January 11, 2013, the last trading day before rumors of a possible going-private transaction were first published.
The proposed amendments to the merger agreement include increase the merger consideration to $13.75 in cash per share of Dells common stock, representing an increase in the consideration to be paid to unaffiliated stockholders of approximately $150 million; and alteration of voting terms, which would not consider lack of votes as "against" transaction. Many unaffiliated stockholders did not vote at all, but present terms consider them as against the buyout.
The transaction will be financed through a combination of cash and equity contributed by Mr. Dell, cash funded by investment funds affiliated with Silver Lake, a cash investment by an investment fund affiliated with MSDC Management, a $2 billion loan from Microsoft, rollover of existing debt, as well as debt financing that has been committed by BofA Merrill Lynch, Barclays, Credit Suisse and RBC Capital Markets (in alphabetical order), and Dell’s cash on hand. There is no financing condition.
Investor Carl Icahn and its ally Southeastern Asset Management have made a number of different offers to derail the bid, most recently suggesting that the company repurchase most of the outstanding shares at $14 apiece and offer some warrants, reports Bloomberg news-agency.
“We have spent the past six months explaining why we believe that not only does the Michael Dell/Silver Lake transaction undervalue the company, but it also freezes out loyal stockholders who deserve the opportunity to stay with Dell. Today, Michael Dell and Silver Lake crossed the Rubicon by trying to take away the one provision in the merger agreement that actually provided stockholders with a voice in their company. It is time for Michael Dell and this board to go,” said Mr. Icahn in an email.
Many analysts believe that $13.65 - $13.75 per share greatly undervalues the company and that large investors are likely to sell their shares to Mr. Icahn or even find a new management team for the firm.