Dell Special Committee Backs Michael Dell Over Ichan's Counter Offer
A special committed formed by an independent group of directors weighed in on the situation with Dell and the two offers on the table, one a buyout bid by company co-founder Michael Dell and the other a dividend payment by activist investor Carl Icahn. The committee's suggestion? Take Michael's money and run.
Michael, along with private equity firm Silver Lake Partners, originally proposed a $24.4 billion buyout of the world's third largest PC maker with the intention of taking the company private. Under that scenario, Microsoft would kick in a $2 billion loan to help seal the deal.
Dell's board of directors unanimously voted in favor of the deal, which would pay shareholders $13.65 per share, a 25 percent markup over Dell's closing price of $10.88 the day before rumors of the deal were published. Since then, some outspoken shareholders said the offer undervalued the company. Icahn has been the most vocal and counter-offered a $21 billion package that would pay shareholders $12 per share, plus allow them to keep their stock.
In a 39-page report to the U.S. Securities & Exchange Commission (SEC), the committed said there is a "significant liquidity gap" in Icahn's proposal, one that would reduce the $12 dividend to $8.50 per share. In light of that, the committee believes Michael's offer is the superior one.
Michael, along with private equity firm Silver Lake Partners, originally proposed a $24.4 billion buyout of the world's third largest PC maker with the intention of taking the company private. Under that scenario, Microsoft would kick in a $2 billion loan to help seal the deal.
Dell's board of directors unanimously voted in favor of the deal, which would pay shareholders $13.65 per share, a 25 percent markup over Dell's closing price of $10.88 the day before rumors of the deal were published. Since then, some outspoken shareholders said the offer undervalued the company. Icahn has been the most vocal and counter-offered a $21 billion package that would pay shareholders $12 per share, plus allow them to keep their stock.
In a 39-page report to the U.S. Securities & Exchange Commission (SEC), the committed said there is a "significant liquidity gap" in Icahn's proposal, one that would reduce the $12 dividend to $8.50 per share. In light of that, the committee believes Michael's offer is the superior one.
