Personal computer tycoon Michael Dell is nearing victory in his battle to take private the company he founded three decades ago, after increasing his cash offer by at least $350m (£229m).
The sweetener, offered by Dell and his co-bidder, the private equity firm Silver Lake Partners, has won a key concession from the independent special committee set up to consider the $24bn buyout on behalf of the company's other shareholders.
The concession, involving a change to the company's voting rules, could be enough to swing the outcome in Dell's favour.
The extra money will pay for an increase in the purchase price of 10 cents to $13.75 per share, and a special dividend of 13 cents a share. It will also guarantee that the third quarter dividend of 8 cents is paid, a guarantee worth a further $120m dollars, bringing the total increase in Dell's offer to $470m.
Had the deal closed before late October – as now seems unlikely – shareholders could have missed out on the third quarter dividend.
"The Committee is pleased to have negotiated this transaction, which provides as much as $470m of increased value, including the next quarterly dividend that will now be paid regardless of when the transaction closes," said Alex Mandl, chairman of the special committee.
"We believe modifying the voting standard is in the best interests of Dell shareholders, both because it has enabled us to secure substantial additional value and because it provides a level playing field for the decision facing shareholders."
An end is now in sight for the six-month tug of war over one of America's largest PC makers. It is a struggle that has involved a shareholder rebellion led by corporate raider Carl Icahn, and a counter-bid from the Blackstone private equity group.
Without a best selling smartphone or tablet, Dell is missing out on the portable computing boom dominated by Apple and Samsung. Its founder wants to move the company away from making laptop and desktop computers, which are being replaced less often by consumers, to focus on serving corporate clients.
Dell's 5 February agreement to de-list the business, which he still runs as chairman and chief executive, from New York's Nasdaq stock exchange has faced intense opposition.
Icahn argued that the price is too low, and that investors should receive an upfront payment that shared more of the upside from a turnaround. In the latest twist, Icahn sued on Thursday to stop a voting rule change, but it was agreed by the special committee and announced to stockholders on Friday.
As a result, only shares actually voted count, altering an earlier clause that counted abstentions as "no" votes. A lower than expected turnout delayed previous votes because of the risk that the number of abstentions would see Dell defeated.
As with the previous deal, Michael Dell, who has a 15.7% stake in the company, will be excluded from the vote and his shares not counted in the tally. He responded to the deal on Twitter, writing: "We are pleased to have won another battle in the Dell war but the war itself is far from over. More to follow."
The latest vote date, which had been set for Friday morning, has been delayed again. Shareholders will be asked to decide the manufacturer's fate on 13 August. There has also been a reduction in the breakup fee that is payable should the deal fall through, from $450m to $180m.
To pay for the sweetener, Dell and Silver Lake are raiding the firm's cash savings, using funds that could have been invested in restructuring the business and paying down the debt raised to fund the buyout.
theguardian.com
The sweetener, offered by Dell and his co-bidder, the private equity firm Silver Lake Partners, has won a key concession from the independent special committee set up to consider the $24bn buyout on behalf of the company's other shareholders.
The concession, involving a change to the company's voting rules, could be enough to swing the outcome in Dell's favour.
The extra money will pay for an increase in the purchase price of 10 cents to $13.75 per share, and a special dividend of 13 cents a share. It will also guarantee that the third quarter dividend of 8 cents is paid, a guarantee worth a further $120m dollars, bringing the total increase in Dell's offer to $470m.
Had the deal closed before late October – as now seems unlikely – shareholders could have missed out on the third quarter dividend.
"The Committee is pleased to have negotiated this transaction, which provides as much as $470m of increased value, including the next quarterly dividend that will now be paid regardless of when the transaction closes," said Alex Mandl, chairman of the special committee.
"We believe modifying the voting standard is in the best interests of Dell shareholders, both because it has enabled us to secure substantial additional value and because it provides a level playing field for the decision facing shareholders."
An end is now in sight for the six-month tug of war over one of America's largest PC makers. It is a struggle that has involved a shareholder rebellion led by corporate raider Carl Icahn, and a counter-bid from the Blackstone private equity group.
Without a best selling smartphone or tablet, Dell is missing out on the portable computing boom dominated by Apple and Samsung. Its founder wants to move the company away from making laptop and desktop computers, which are being replaced less often by consumers, to focus on serving corporate clients.
Dell's 5 February agreement to de-list the business, which he still runs as chairman and chief executive, from New York's Nasdaq stock exchange has faced intense opposition.
Icahn argued that the price is too low, and that investors should receive an upfront payment that shared more of the upside from a turnaround. In the latest twist, Icahn sued on Thursday to stop a voting rule change, but it was agreed by the special committee and announced to stockholders on Friday.
As a result, only shares actually voted count, altering an earlier clause that counted abstentions as "no" votes. A lower than expected turnout delayed previous votes because of the risk that the number of abstentions would see Dell defeated.
As with the previous deal, Michael Dell, who has a 15.7% stake in the company, will be excluded from the vote and his shares not counted in the tally. He responded to the deal on Twitter, writing: "We are pleased to have won another battle in the Dell war but the war itself is far from over. More to follow."
The latest vote date, which had been set for Friday morning, has been delayed again. Shareholders will be asked to decide the manufacturer's fate on 13 August. There has also been a reduction in the breakup fee that is payable should the deal fall through, from $450m to $180m.
To pay for the sweetener, Dell and Silver Lake are raiding the firm's cash savings, using funds that could have been invested in restructuring the business and paying down the debt raised to fund the buyout.
theguardian.com
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