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Michael Dell Inks Revised Deal To Take Dell Private For About $24.9 Bln


Personal computer maker Dell, Inc.'s (DELL) special committee has Friday agreed to a revised deal for Dell to be taken private by its Founder, Chairman and CEO Michael Dell and private equity firm Silver Lake Partners that includes an improved offer and additional special dividend in return for amending voting rules to aid the smooth approval of the deal.

The revised agreement will increase aggregate value to unaffiliated shareholders by about $470 million, including a third-quarter dividend, and now take the total deal value to about $24.9 billion.

The chairman of the special committee has also urged all shareholders to support the revised deal that has the approval of the special committee and the independent members of Dell's board of directors.

Round Rock, Texas-based Dell had initially agreed in early February to be taken private for $13.65 per share by Michael Dell in partnership with Silver Lake in a $24.4 billion deal. The deal was expected to close before the end of the second quarter of Dell's fiscal year 2014.

In late-July, Michael Dell and Silver Lake raised their offer for Dell by another ten cents to $13.75 per share in cash, but subject to a change in voting rules in order to aid the buyout process. That offer raised the original $24.4 billion bid for Dell by $150 million.

The buyout group had called for shares of unaffiliated stockholders that are not voted at the special meeting on the merger, to be ignored and not considered as being against the deal. That means only the majority of the outstanding shares held by the unaffiliated stockholders that are present and voting for or against deal are to be counted. Earlier, abstentions were counted as votes against the deal.

In the current revised deal agreed by the special committee of the Dell board, Michael Dell and Silver Lake, offered an additional sweetener of $0.13 per share special dividend and guarantees the payment of third quarter dividend of $0.08 per share, both in exchange for a modification of voting rules. Both dividends will be paid at or before closing of the deal. Taking into account the third-quarter dividend part, the total consideration payable to unaffiliated stockholders will increase by an additional $120 million.

According to the company, "Revised agreement brings total consideration to at least $13.88 per share, increases aggregate value to unaffiliated shareholders by at least $350 million and requires approval of majority of disinterested shares actually voted."

The special committee revealed that it now intends to reset record date to August 13 and adjourn the special shareholder meeting to vote on the deal to September 12.

Alex Mandl, chairman of the Special Committee, said, "The Committee is pleased to have negotiated this transaction, which provides as much as $470 million of increased value, including the next quarterly dividend that will now be paid regardless of when the transaction closes."

In return for the increased value to shareholders, the special committee has modified the voting standard such that the improved transaction will require approval by the majority of disinterested shares actually voting on the matter.

Additionally, the revised agreement will also see a reduction in breakup fee to $180 million from the original $450 million.

"Accordingly, we have changed the voting standard to require that the going-private transaction receive the approval of a majority of the disinterested shares that are actually voted. By resetting the record date and providing abundant notice of the new meeting we are ensuring that all disinterested shareholders, including those who have acquired their shares since June 3, have ample opportunity to vote for or against the transaction. We urge all shareholders to support this transaction," Mandl added.

In Friday's regular trading session, DELL is currently trading at $13.64, up $0.69 or 5.29% on a volume of 73.37 million shares. In the past 52-week period, the stock has been trading in a range of $8.69 to $14.64.

by RTTNews Staff Writer

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