NEW YORK — Three top proxy advisory firms are recommending that Dell shareholders vote in favor of a deal that would allow the company’s founder and an investment firm to buy the computer maker and take it private.
Michael Dell and Silver Lake Partners have offered to buy Round Rock, Texas-based Dell Inc. for $13.65 per share, or a total of $24.4 billion. 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.
But Carl Icahn, a billionaire investor and Dell’s second-largest shareholder, says he wants Dell to remain publicly traded and boost value for shareholders by buying back $16 billion in stock.
The company has backed Michael Dell’s proposal and said that Icahn doesn’t have adequate financing for his plan. Shareholders will vote on the buyout offer at the company’s annual meeting on July 18.
In its report, Institutional Shareholder Services pointed to the offer’s hefty premium, about 26 percent over the company’s share price before the offer became public, and the certainty that comes with an all-cash bid.
ISS said that if shareholders don’t take the offer, they have to be willing to continue to hold shares in Dell as it continues to transform itself amid the risks of a still deteriorating personal computer industry.
Glass Lewis and Egan-Jones joined ISS in supporting for the Michael Dell bid.
The special committee of Dell’s board evaluating the company’s options said in a statement that it was pleased with the three recommendations, noting that the cash sale “will provide certainty of value at a substantial premium, and is therefore in the best interests of shareholders.”
Icahn said Sunday that he believes Michael Dell is trying to buy the company he founded at a “bargain price.” He reiterated the benefits of his alternate proposal, which would involve the repurchase of up to 1.1 billion Dell shares at $14 apiece.
On Monday, Icahn and his ally, Southeastern Asset Management, said in a statement that they would vote against the buyout offer being supported by Michael Dell.
“We continue to believe that Dell’s owners deserve better,” they said in the statement.
Icahn’s plan would be funded with $5.2 billion in debt, $7.5 billion in Dell cash 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.
Dell shares rose 41 cents, or 3.1 percent, to $13.44 in trading on Monday — 21 cents below the offer price of $13.65.
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