Tags: dell | buyout | endorsement

Dell Buyout Gets Key Endorsement; Company's Future on the Line

Monday, 08 Jul 2013 06:41 PM

By Morgan Chilson

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A buyout for Dell Inc. was supported Monday by top proxy advisor Institutional Shareholder Service after reports that the would-be buyers don't plan to up their offer, according to DealB%k at the New York Times.

Michael S. Dell, founder of the computer company, and Silver Light Partners made a leveraged buyout offer of $24.4 billion, which has been fought by what Forbes called “activist investors,” hedge fund leader Carl Icahn and Southeastern Asset Management.

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The ISS approval was a surprise to buyers and a special Dell board committee, Dealb%k reported. The Dell management buyout offer includes $13.65 a share in the proposal.

Taking the company private is critical in helping Dell get back on solid ground, getting away from manufacturing personal computers and moving toward selling software and services, Dealb%k reported.

ISS wrote in its report that the Dell offer was a “significant 25.5 percent premium to the company’s unaffected share price, and that it also let shareholders effectively sell the risk of turning around the company to Mr. Dell and Silver Lake,” Dealb%k said.

Forbes reported that a vote on the buyout will occur in July and that the ISS recommendation probably will put a stop scrapping the management buyout.

“The ISS vote is a positive for Dell and Silver Lake,” Jeffrey Fidacarao, an analyst at Monness Crespi Hardt 7 Co., told Bloomberg. “They may not feel like they actually need to raise the deal if ISS is agreeing with them.”

Bloomberg reported that the ISS statement said, “The alternative to accepting the buyout offer is to continue holding equity in a publicly traded Dell, with continued exposure to the risks and rewards of ownership.”

Bloomberg reported that institutional investors often vote their shares based on ISS recommendations. The news organization quoted Icahn and Southeastern’s statement today after the ISS assessment came out: “‘We continue to believe that Dell’s owners deserve better and can achieve more by voting against’ the buyout.”

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Related stories:

Michael Dell May Get 50% Return From Buyout, Southeastern Says

Dell Buyout May Herald Rebound in Mergers, Deals

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