Michael Dell and Silver Lake Backtrack on Previous Remarks, Raise Bid to $13.75 Cash (DELL)
Backtracking on previous remarks, Michael Dell and Silver Lake Partners have increased the offer to purchase all of the shares of Dell (NASDAQ: DELL) to $13.75 per share from the previous offer of $13.65 per share.
The increase represents additional value to shareholders of $150 million, excluding the shares held by the consortium offering to buy the company.
Michael Dell and Silver Lake previously stated multiple times that there would not be an increased bid for the company. However, the two now have increased the offer to $13.75, a mere 10 cents per share higher, which marks a sharp change in policy. The increase in the bid potentially opens up communication lines between Dell and Silver Lake with Carl Icahn to discuss a deal between the offers.
The offer is still below the offer proposed by shareholders Carl Icahn and Southeastern Asset Management. The consortium has proposed to buy back 1.1 billion shares (nearly 63 percent of shares) at $14 per share and give shareholders a warrant to buy additional stock at $20 per share for every four shares that they own. This deal has a total value of about $15-18 per share depending on the value of the warrants.
After receiving the new offer, the Dell special committee tasked with evaluating these offers has postponed the already delayed vote on the Michael Dell offer. Shareholders were expected to vote Wednesday, but now the meeting is scheduled for August 2.
"In light of the revised proposal, which the Special Committee is evaluating with the assistance of its financial and legal advisors, the Special Meeting of Stockholders previously scheduled to be reconvened today at 5:00 p.m. Central Daylight Time at the Dell Round Rock Campus, 501 Dell Way, Round Rock, Texas 78682 will be adjourned to August 2, 2013 at 9:00 a.m. Central Daylight Time at the same location."
Proposal to Not Count No Votes
Michael Dell is also making a play to make his chances of winning the vote easier. Previously, those who did not submit a vote were counted as no votes, which hurt Michael Dell and Silver Lake's chances of winning approval for their bid; no votes count in the total amount of votes without adding to the number of those voting for the proposal, effectively acting as votes against.
In the latest proposal, Michael Dell is looking to change this procedure and not count 'no' votes at all. In this manner, the total votes counted to find the percentage of those for the proposal would only include those who submit a vote either for or against the bid. This way, Dell could boost his chances of winning by leaving out those who forget to vote or choose not to do so.
"This is our best and final proposal," said Dell and Silver Lake in the letter to the committee. "We are not willing to discuss any further increase in the merger consideration nor are we willing to increase the merger consideration to $13.75 per share without the change to the Unaffiliated Stockholder Approval requirement described above."
"If the Special Committee believes that it would be appropriate to reset the record date for the special meeting in connection with this change to the Unaffiliated Stockholder Approval requirement, we would be ready to accept a new record date so long as the resulting delay in the special meeting is the minimum required by law."
Dell shares rose in the pre-market on the news by 1.71 percent to $13.10 per share. Shares spiked as high as $13.64 on the news before selling off.
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