With just 10 days left for investors voting on his buyout deal, Michael Dell is making efforts to woo undecided investors in his favor.
A special committee of Dell’s board is scheduled to meet major shareholders to support the buyout deal, reports Aaron Ricadela & Serena Saitto of Bloomberg.
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In a surprise move, the company got the backing of Institutional Shareholder Services to the leveraged buyout offer made by the company’s founder Michael Dell.
ISS is the biggest shareholder advisory firm and its recommendation has enhanced the odds in favor of Silver Lake / Michael to prevail over the rival’s bid.
The ISS feels by voting for the leveraged buyout offer, Dell is sheltered from some of the risks linked to the fading PC business. Besides, the firm cited the 25.5 percent premium the leveraged buyout offer provides certainty of value.
Southeastern Asset Management Inc and activist investor Carl Icahn are holding a fifth of Dell’s shares. Earlier they announced the company’s intention for a massive stock buyback that would pay investors $14 a share and leave Dell Inc publicly traded.
Carl Icahn put his war chest to work and arranged $5.2 billion in debt financing from the investment bank Jefferies Group LLC (NYSE:JEF) to counter Michael Dell’s buyout for the company.
Recently, another Dell shareholder, Yacktman Asset Management Co, said it would support the alternative proposal from Carl Icahn and Southeastern Asset Management.
Dell Proposal Requires Majority Vote
The $13.65 a share proposal from Dell and Silver Lake needs a majority of votes to win, excluding Michael’s own 16 percent stake.
The special committee of Dell’s board is set to meet shareholders soon in an attempt to gain the majority vote. The committee has also asked Michael Dell to convince the major shareholders to support his proposal.
The committee was delighted to have the support from ISS and felt the deal would be in the best interest of the shareholders.
If Carl Icahn’s proposal were to succeed, he should first convince Dell shareholders to reject Dell Inc. (NASDAQ:DELL)’s buyout plan, besides asking the shareholders to support his efforts to gain board control in a proxy contest.