Michael Dell Vows To Stay With Company If Plan Fails

Michael Dell has said he will remain with the company he founded if his plan to take Dell private fails, ahead of a shareholder vote scheduled for this Friday.

Dell also reiterated that his revised buyout offer, which raised the price by 10 cents per share to $13.75 (£8.93), or $24.6 billion, is “final”.

Challenges

“If the deal does not go through, I plan to stay and continue to do my best to make the company successful,” Dell said in an interview with the Wall Street Journal on Sunday.

Dell, who founded the company in his university dorm room in 1984 with an investment of $1,000, said he would not support a recapitalisation of the kind being put forward by activist investor Carl Icahn, but he said he is ready to face challenges including a possible proxy fight.

“I am ready to fight and I am committed to doing what I believe is right for the company,” he said.

Dell said it had been “hard to justify an increase” in the buyout price, but that this had been justified by tying the increase to a change in the rules governing how shareholder votes are counted. Dell and partner Silver Lake Management will have to convince the company’s special board committee to accept the increased offer, with the accompanying rules change, ahead of the 2 August vote.

The rules change would allow the deal to proceed if a majority of votes cast are in the affirmative. Previously the deal needed to win a majority of all shareholder votes in order to be accepted, with shares that weren’t voted counting against the deal.

Rules change

Dell said his move to change the voting rules was a direct response to Icahn’s opposition.

“Carl Icahn was not a shareholder when we announced the deal or at any time before, but the voting standard in our contract gave him the opportunity to buy into the company and organise a blocking position with a minority of the company’s shares,” Dell told the Journal. “That’s why we’ve now requested that the standard be changed to allow the will of the majority of the unaffiliated shares voting on the transaction to control the outcome.”

Icahn’s position could block the deal “even though the majority of the unaffiliated shares voting would like to accept it”, Dell said. “This is an unfair result that does not accurately reflect what the shareholders want.”

The increase to the bid is “substantial” considering that “no other party was willing to pay more than $13.65 per share,” Dell told Bloomberg on Sunday.

Dell’s plan would take the company private, a move he believes will give it the flexibility needed to reposition itself as an end-to-end services provider. Icahn’s deal, by contrast, would involve borrowing to repurchase shares and would result in a payout for shareholders, but the company would remain public.

Voting on the deal has been delayed twice.

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