Dell Inc (NASDAQ:DELL)’s special committee is said to be close to a deal with founder Michael Dell and his partner Silver Lake to give them exactly what they want. Activist investor Carl Icahn sued the PC maker on Thursday in an attempt to prevent this from happening. He’s been trying to keep the go-private deal offered by Mr. Dell and Silver Lake from going through because he thinks the company should stay public.
Dell said to be in talks with founder
David Benoit and Sharon Terlep of The Wall Street Journal report that sources have told them that Dell Inc (NASDAQ:DELL)’s special committee is actually close to a deal with Mr. Dell and Silver Lake. Earlier this week the special committee rejected their request to change the voting rules on the go-private offer and instead said they could change the record date. The record date is the date when shareholders must have held their stock in order to be allowed to vote on the offer.
Electron Capital Partners' flagship Electron Global Fund returned 5.1% in the first quarter of 2021, outperforming its benchmark, the MSCI World Utilities Index by 5.2%. Q1 2021 hedge fund letters, conferences and more According to a copy of the fund's first-quarter letter to investors, the average net exposure during the quarter was 43.0%. At the Read More
Mr. Dell raised his original $13.65 per share bid for the company to $13.75 per share, but with the stipulation that the voting rules be changed. Currently the rules call for any shares which don’t vote to be counted as a no. He wants only the shares which cast votes to count, which it’s expected will give him an advantage.
Implications of a new Dell deal
This morning The Wall Street Journal reports that Dell Inc (NASDAQ:DELL)’s special committee is close to a deal for the $13.75 increased bid from the company’s founder, although sources said that the deal wasn’t complete yet. If the deal is completed, then the shareholder vote on the PC maker’s fate would likely be delayed yet again.
The original $13.65 per share offer was supposed to go to a vote today at 10 a.m. Eastern, but this new deal, if it’s reached in time, could spur a premarket announcement from the company. It’s expected that the vote could be delayed by another month if the deal happens. This would be the third delay for the shareholder vote.
Luring Dell shareholders in
One of the concerns Dell Inc (NASDAQ:DELL) and the company’s founder have to deal with right now is trying to convince shareholders to vote in their favor. They’re said to be considering a special dividend to help ease concerns. It would give shareholders more money, which would enable the special committee to say that it worked out the best possible deal with the buyout group, Mr. Dell and Silver Lake.
The buyout group, in return, would not have to put up more equity, so their future returns would not be affected. They would simply take money out of the company’s cash instead—money that had been earmarked for operations and paying down the large amounts of debt the company is about to have piled on.
Dell shares rising
In premarket trading, shares of Dell Inc (NASDAQ:DELL) rose as much as 4 percent. During the regular trading day on Thursday, they rose 2 percent. At this point, the stock is still below the $13.75 per share amended offer, and Topeka Capital analyst Brian J. White believes the stock could go even higher. He has a Buy rating and a $15 per share price target on the stock.