Personal computer maker Dell Inc. (DELL: Quote), which is in a deal to be taken private by its CEO Michael Dell and private equity firm Silver Lake Partners, said Monday that a special committee of its board of directors has sent another letter to billionaire investor Carl Icahn and Southeastern Asset Management Inc., seeking additional information on their alternative takeover bid submitted on May 9. Dell said it looked forward to a response to its earlier letter dated May 13.
The special committee of Dell's board said it had sent a letter earlier on May 13 to Icahn Enterprises L.P. (IEP: Quote) and Southeastern Asset Management's Staley Cates, requesting clarifications and additional materials related to their takeover proposal. At that time, Dell noted that it was not clear whether Icahn and Southeastern Asset Management's proposal was an acquisition offer or an alternative if the pending 'going private' deal was not approved.
The special committee noted that representatives of Icahn and Cates have made a number of requests for information, including a request for data room access for a potential lender.
However, in its latest letter to Icahn and Southeastern Asset Management dated May 20, the special committee said, "Unless the Board of Directors of Dell determines that your proposal could reasonably be expected to result in a "Superior Proposal" as defined in the Company's existing merger agreement with affiliates of Silver Lake and Michael Dell, we are not permitted to provide you with information or engage in discussions concerning your proposal."
In February, Dell agreed to be acquired and taken private in a $24.4 billion deal by its founder, chairman and CEO Michael Dell in partnership with private equity firm Silver Lake. The deal is expected to close before the end of the second quarter of Dell's fiscal year 2014. The merger agreement provided for a 45-day "go-shop" period.
Dell revealed in a regulatory filing in early May that two of its largest outside shareholders Icahn and Southeastern, who together own about 13 percent of Dell, have decided to vote against the 'going private' deal as it was not in the best interests of Dell shareholders and also substantially undervalued the company.
Icahn and Southeastern floated an alternative deal that will provide shareholders an option to receive either a distribution of $12 per share in cash or $12 per share in stock valued at $1.65 per share, allowing them to hold on to existing stock. Both Southeastern and Icahn said they would elect to take additional shares rather than cash. They also said the offer would be financed with existing cash at Dell and about $5.2 billion in new debt.
Further, Icahn and Southeastern also threatened to launch a proxy fight if Dell shareholders were not provided with the opportunity to vote for their proposal side-by-side with the 'going private deal' in a single meeting.
Last Thursday, Dell said its first-quarter profit dropped 79 percent from last year, as revenue declined and margins deteriorated amid sluggish demand for personal computers.
In Monday's regular session, DELL is trading at $13.41, up $0.01 or 0.07 percent on a volume of 3.19 million shares.
by RTT Staff Writer
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