Business

Michael Dell and Silver Lake up buyout bid to $13.75; shareholder vote now Aug. 2

Above: Dell founder Michael Dell

Image Credit: Kevin Krejci/Flickr

Michael Dell and private equity firm Silver Lake have increased their bid to buy computing business Dell to $13.75 a share, 10 cents higher than their previous bid.

Dell (the company) is in a tough spot at the moment. Michael Dell (pictured) and Silver Lake want to take the company private, but have been in a fight with activist investor Carl Icahn, who has made his own offer. Icahn’s latest offer would have him buy 72 percent of the company’s shares for $14 a share, and he would have the option to buy additional shares for $20 a share. Shares not bought by Icahn would keep trading on the public market.

As a condition of Michael Dell and Silver Lake’s new bid of $13.75, they’re asking for a change in the voting requirement for the merger so that only a simple majority of shareholders would be needed to approve the deal.

“This is our best and final proposal,” Dell and Silver Lake wrote in a letter to shareholders. “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.”

Because of the new proposal, the company’s shareholder vote on the buyout — which was supposed to happen today — has been delayed to Aug. 2 at 8 a.m. Pacific. We’ll be sure to report on what happens there.

Read the full letter from Michael Dell and Silver Lake below.

Dear Members of the Special Committee:

In light of the circumstances surrounding the Dell Inc. (the “Company”) stockholders’ consideration of the proposal to adopt the merger agreement between the Company and Denali Holding Inc. and certain of its affiliates, we propose amending the merger agreement as described below. We believe these amendments are fair and in the best interests of the Company’s unaffiliated stockholders and provide the best alternative available to the Special Committee to maximize stockholder value.

Our proposed amendments to the merger agreement are as follows:

1. increase the merger consideration to $13.75 in cash per share of Company common stock, representing an increase in the consideration to be paid to unaffiliated stockholders of approximately $150 million; and

2. modify the “Unaffiliated Stockholder Approval” requirement in the merger agreement to provide that the voting requirement is the approval of a majority of the outstanding shares held by the unaffiliated stockholders that are present in person or by proxy and voting for or against approval of the merger agreement at the stockholder meeting.

This is our best and final proposal. 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.

We believe our proposed change to the Unaffiliated Stockholder Approval requirement is fair and reasonable to the Company’s unaffiliated stockholders, particularly in the context of our willingness to increase the merger consideration. There is simply no rational basis for shares that are not voted to count as votes against the merger agreement for purposes of the unaffiliated stockholder vote. If a majority of the shares held by unaffiliated stockholders who vote are voted in favor of the merger agreement, it would be unfair to deny these stockholders the merger consideration they wish to accept solely because shares not voting are counted as votes against the transaction.

We welcome the opportunity to discuss this proposal with the Special Committee and its advisors as soon as possible. This proposal will automatically be withdrawn and terminate at 6:00 p.m. New York time on July 24, 2013, unless extended in writing by us in our sole discretion. No legally binding obligation will be created on any person with respect to this proposal unless and until a mutually acceptable definitive amendment to the merger agreement has been entered into by the parties.

We look forward to your response.

Sincerely,

DENALI HOLDING INC.

By:__/s/_____________________ Name: Egon Durban

By:__/s/_____________________ Name: Michael S. Dell


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