Dell-Silver Lake Increase Buyout Offer to $24.6 Billion

Michael Dell and Silver Lake Management LLC sweetened their proposal to buy Dell Inc. (DELL), boosting their offer to about $24.6 billion in an effort to clinch shareholder support.

The parties increased the offer to $13.75 a share from $13.65 and called it their “best and final proposal,” according to a statement today. Dell delayed a vote on the leveraged buyout to Aug. 2 at 9 a.m. local time at the personal-computer maker’s headquarters in Round Rock, Texas.

The new offer also requires that the Dell special committee agree not to count abstentions as votes against the deal, according to a letter included in the statement. After days of wooing by Dell and his camp, some 18 percent of eligible shares still hadn’t voted as of two days ago, a person familiar with the situation said. That works against the founder because absentees counted as “no” votes under the earlier proposal.

If approved by shareholders, the new bid would end a six-month fight between Chief Executive Officer Dell and billionaire Carl Icahn, who has tried to derail the deal by proposing the company repurchase most of the outstanding shares at $14 apiece and offer some warrants.

The new offer from Michael Dell and Silver Lake is 26 percent more than the computer maker’s closing share price of $10.88 on Jan. 11, the last trading day before news of a deal surfaced. A majority of investors, excluding Dell’s 15.6 percent stake in the computer maker, will have to approve for the deal to pass. Dell had originally planned a shareholder vote on the buyout last week and rescheduled that to today after it was unable to secure enough support.

Dell’s History

Dell rose 2.1 percent to $13.15 at 8:51 a.m. in New York before regular trading opened.

By taking the company he founded in 1984 private, Dell is seeking to transform it into a bigger provider of hardware, software and services for corporate-data centers, after years of ebbing sales and profit. Dell’s initial offer, which had the support of the company’s board, won backing from Institutional Shareholder Services Inc. earlier this month.

Investors who held shares as of June 3 were eligible to vote. Dell and Silver Lake said today that they would be willing to accept a new date of record for shareholders if the special committee deems it necessary.

Since announcing the buyout Feb. 5, the special committee of Dell’s board has argued that the company’s prospects of a turnaround are better outside of the public lens.

Growth Predictions

Once the world’s top supplier of PCs, Dell has spent about $13 billion on acquisitions over the past five years to add enterprise computing hardware, software and services, though the deals have yielded little return for investors. Meanwhile, the company has ceded the fast-growing mobile-computing market to Apple Inc. and devices running Google Inc.’s Android operating system.

Dell’s board predicted another year of lackluster growth in fiscal 2014 as demand for personal computers ebbs, underscoring the urgency behind the company’s decision to be taken private.

Market conditions have only worsened. PC shipments, which account for more than half of Dell’s sales, dropped 10.9 percent in the second quarter, their fifth straight period of decline, research firm Gartner Inc. said this month.

Source:Bloomberg