Personal computer maker Dell Inc. (DELL) said Friday that the special committee of its board of directors has unanimously recommended that stockholders vote to approve the company's $24.4 billion merger deal with its CEO Michael Dell and private equity firm Silver Lake, at a special meeting of stockholders to be held on July 18.
The special committee noted that the transaction provides shareholders with immediate value and is in the best interests of shareholders.
Dell said it has filed definitive proxy materials with the Securities and Exchange Commission or SEC in connection with the shareholders' special meeting to approve the transaction under which the company's founder, chairman and CEO Michael Dell in partnership with Silver Lake will acquire the company for $13.65 per share in cash.
In February, Dell agreed to be acquired and taken private in a $24.4 billion deal by Michael Dell in partnership with 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.
However, Dell revealed in a regulatory filing in early May that two of its largest outside shareholders billionaire investor Carl Icahn and Southeastern Asset Management Partners, 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 merger deal that will provide shareholders an option to receive either a distribution of $12 per share in cash or 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.
On May 20, Dell said that the special committee sent a letter to Icahn and Southeastern Asset Management, seeking additional information on their alternative takeover bid submitted on May 9. Dell said it looked forward to a response to its previous letter dated May 13.
Dell's special committee said Friday that its analysis led them to conclude unanimously that a sale to the Michael Dell/Silver Lake group for $13.65 per share is the best alternative available as it offers certainty and a very material premium over pre-announcement trading prices, amid a challenging business environment.
In a letter to Dell's shareholders, the special committee noted that Dell 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, which represents a 25 percent premium to the company's unaffected stock price on the last trading day prior to media leaks about the proposed deal.
The special committee said in the letter, "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."
DELL closed Thursday's trading at $13.27. In Friday's pre-market, the stock is down $0.06 or 0.45 percent to $13.21.
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