Michael Dell Under Pressure To Raise The Bid after Icahn Secures Financing


Chief Executive Michael Dell may have to increase the bid to carry on with the buyout plan of the company, which he founded.

Michael Dell Under Pressure To Raise The Bid after Icahn Secures Financing

Michael Dell suggested by special committee

Michael Dell was encouraged by a special committee of Dell Inc. (NASDAQ:DELL) directors over the weekend to raise the offer price of $13.65 a share, says a report from DealBook citing a person briefed on the matter.

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Though the founder listened to the advice given by the board, he made no comment on the matter. Also, Michael Dell and Silver Lake have not had any discussion over raising the bid amount, says the person familiar with the matter.

Special committee worried

As per the report, the special committee is worried that the offer from Mr. Dell may fail to win the requisite votes at the vote on July 18. To go ahead with the buyout plan, around 43 percent of the votes are needed. Also directors, after the number of meetings with the major investors, are worried that the bid might fail. It is also believed that the major shareholder advisory firm may even recommend a rejection of the takeover.

All depends on Michael Dell 

Big outside investors have been criticizing the offer made by Mr. Dell and Silver Lake for months. It is unlikely that Silver Lake will raise the bid as the firm, at one point, refused to increase the bid beyond $13.60.

So, it all depends on Mr. Dell to increase the bid. The additional money needed might come from his 16 percent stake, which he agreed to sell for $13.36 to leave more money for other shareholders.

Still, any changes in the bid amount from Mr. Dell will need the consent of Silver Lake as the price will certainly affect the returns on investment.

So, with a shareholder vote on the offer nearing, along with persistent opposition from two big Dell Inc. (NASDAQ:DELL) shareholders, Carl C. Icahn and the asset manager Southeastern Asset Management, pressure is certainly increasing on the founder.

Mr. Icahn’s alternate plan

The situation has mainly arisen from an alternate campaign by billionaire Mr. Icahn and Southeastern Asset Management, to go for a massive stock buyback paying investors $14 a share and leave the company publicly traded.

Recently, to support his offer, Mr. Icahn told that he had arranged $5.2 billion in debt financing from the investment bank Jefferies. However, other shareholders took little notice of the announcement made by activist investor.

In last five days, Dell Inc. (NASDAQ:DELL)’s stock has gained 0.2 percent and closed at $13.38 on Tuesday.