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Dell Files Definitive Proxy Materials and Issues Letter to Shareholders

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Dell Inc. (NASDAQ: DELL) today announced that it has filed definitive proxy materials with the Securities and Exchange Commission (“SEC”) in connection with a Special Meeting to be held on July 18, 2013 to approve a transaction under which Michael Dell, the company's Founder, Chairman and Chief Executive Officer, in partnership with global technology investment firm Silver Lake, will acquire the company for $13.65 per share in cash. The price represents a premium of approximately 37 percent over the average closing share price during the 90 calendar days ending January 11, 2013, the day prior to when rumors regarding the transaction entered the marketplace.

The Special Committee of the Board of Directors has also issued an open letter to shareholders recommending that shareholders vote to approve the transaction and outlining the reasons for the recommendation.

Included below is the full text of the letter to Dell shareholders:

May 31, 2013 Dear Stockholders, At the direction of the Special Committee of the Board of Directors of Dell Inc., the Company has filed with the United States Securities and Exchange Commission a definitive proxy statement relating to the proposed acquisition of Dell by affiliates of Silver Lake Partners and Michael S. Dell for $13.65 per share in cash. At a Special Meeting of Stockholders to be held on July 18, 2013, you will be asked to vote on that transaction. Dell's independent directors unanimously recommend that you vote to approve the transaction by voting “FOR” the Michael Dell/Silver Lake merger agreement.

Your vote is very important. Please review the proxy statement carefully, and then promptly submit your proxy – by telephone, by Internet or by mail – to ensure that your shares are represented at the Special Meeting.

While these matters are more fully described in the proxy statement, we thought it would be helpful for us to highlight below the process the Special Committee followed in reaching our unanimous recommendations.

Comprehensive Review Process

The Special Committee was formed last August after Mr. Dell informed the Board he was exploring the possibility of proposing a transaction to take the Company private. From the outset, we determined to evaluate the full range of strategic and financial alternatives available to the Company, including continuing with or modifying the Company's existing business plan as it seeks to transform its business model; changing the dividend policy; selling to a strategic buyer; making additional transformative acquisitions; and selling or spinning off portions of the business. In addition, we carefully considered the merits and feasibility of a leveraged recapitalization.

To assist us in this effort, we hired an experienced group of independent legal and financial advisors and, in addition, took the unusual step of retaining a top management consulting firm – The Boston Consulting Group – to help us evaluate the risks and opportunities in both the PC business and the Company's effort to transform itself into a more enterprise-centric business.

In addition to a comprehensive analysis of alternatives, we carried out a rigorous sale process calculated to obtain the highest price available. Our negotiations with Mr. Dell and Silver Lake resulted in six price increases delivering $4 billion of additional value to Dell stockholders, as well as an extraordinarily open “go shop” process that allowed all interested bidders to enter the process. In the course of that go-shop, 21 strategic and 52 financial buyers were contacted and a number of parties conducted diligence, although no superior offer has materialized.

Our analysis led us to conclude unanimously that a sale to the Michael Dell/Silver Lake group for $13.65 per share is the best alternative available – in a challenging business environment it offers certainty and a very material premium over pre-announcement trading prices. It also shifts very substantial risks to the buying group – risks that in any leveraged recapitalization would be retained by the stockholders and considerably magnified by leverage and the public nature of the resulting stub.

Transaction Provides Attractive, Certain Cash Premium

In recent months, the Company has faced deteriorating market conditions that underscore the risks of any other strategy and highlight the value of a certain cash sale at $13.65 per share – a 37% premium to Dell's 90-day average price and a 25% premium to the unaffected price on the last trading day prior to media leaks about the proposed deal. We are fully convinced that this significant, immediate and certain premium is superior to owning Dell as a stand-alone entity today – with or without a leveraged recapitalization – as well as to the other strategic and financial alternatives potentially available.


Having conducted a thorough and probing review of Dell's challenges and opportunities, we believe that the risks and uncertainty of a stand-alone public company are high and that the transaction we have negotiated offers superior value for Dell stockholders. We unanimously recommend that stockholders vote to approve the transaction by voting “FOR” the Michael Dell/Silver Lake merger agreement at the Special Meeting of Stockholders. We are honored to serve the Dell stockholders during this important process. Again, we urge you to consider fully the materials in the proxy statement and promptly submit your proxy – by telephone, by Internet or by mail – voting “FOR” all items.

Sincerely yours,


Posted-In: News M&A


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