Michael Dell Urged To Increase Buyout Offer – Report

Icahn’s proposal includes a stock buyback plan at $14 (£9.24) per share that would keep the company public. He also has said that if he is successful in buying the company, Michael Dell would no longer be CEO.

Buyout Headaches

The special committee has publicly endorsed the Michael Dell-Silver Lake proposal and recently had questioned Icahn’s ability to get the necessary financing for his proposal. However, Icahn has gotten the financial commitments he needs, and in an open letter to investors and the special committee 1 July, he argued that his deal is superior to Michael Dell’s. He urged the special committee to agree and said that, at the least, the committee should pull back its recommendation for Michael Dell’s offer.

The special committee said it is reviewing Icahn’s bid and that it “remains committed to achieving the best outcome for all Dell shareholders.”

Michael Dell also reportedly is looking at yet another hurdle. According to the New York Times, Silver Lake officials have become concerned about what they see as a deterioration in the company’s business, and that they would not be upset if the deal fell apart. Dell officials in May reported a 2 percent drop in revenues and a 51 percent decrease in profits. A focus of analysts questions were around aggressive PC pricing, which Dell officials admitted was hurting the bottom line in the short term, but would result in an expanded customer base over time.

In his letter to shareholders, Icahn said he agreed with the strategy, but argued that by endorsing Michael Dell’s proposal to take the company private, the board of directors was ensuring that investors would not be able to share in the future growth.

“We believe that it would be a sad outcome for stockholders and would, to say the least, reflect terribly on all who are involved in this process if, after purchasing shares at what we perceive to be a substantially undervalued price of $13.65 per share, Michael Dell and Silver Lake earned substantial returns on their investment while other stockholders are forced to sell,” he wrote.

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