Personal computer maker Dell, Inc. (DELL), which is in a deal to be taken private by its founder, Chairman and CEO Michael Dell and private equity firm Silver Lake Partners, has Monday requested for additional information on the alternative deal floated last week by Icahn Enterprises L.P. (IEP) and Southeastern Asset Management, Inc.
In a letter from the Special Committee of the Board of Directors of Dell to Icahn Enterprises's billionaire investor Carl Icahn and Southeastern's Staley Cates, Dell has sought additional information related to the proposed leveraged recapitalization transaction.
Dell requests both Icahn and Southeastern to provide a draft of the definitive agreement in order to get clarity on the actual offer. The company said it is not clear if it was an acquisition offer or an alternative if the pending 'going private' deal is not approved.
Dell has also sought clarity on the proposed financing for the deal, such as terms of debt financing, and contingencies available if cash on hand or stockholder rollovers are less than anticipated. It also seeks commitment letters from the at least 20 percent of Dell's shares who they said in the proposal will elect to receive distributions in the form of additional Dell shares.
Further, Dell wants to know more about the relationship between Icahn and Southeastern, and also that who would make the senior management team under their offer along with the strategy and operating plans for the company.
On Friday, Dell revealed in a regulatory filing on Friday that Icahn and Southeastern, together own about 13 percent of Dell, have decided to vote against the 'going private' deal as it is not in the best interests of Dell shareholders and substantially undervalues the company.
They also 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 a 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.
Round Rock, Texas-based Dell had agreed in early February to be taken private in a $24.4 billion deal by Michael Dell in partnership with private equity firm Silver Lake Partners. The deal is expected to close before the end of the second quarter of Dell's fiscal year 2014.
Two of the largest outside shareholders of Dell, Southeastern Asset Management and T. Rowe Price (TROW) had already made public their decision to vote against the leveraged buyout since then.
The strength of Michael Dell's offer is his participation and his decision to roll over his 15.6 percent stake to help finance the deal.
The deal provided for a robust 45-day go-shop process, and Dell incentivized its financial adviser Evercore Partners for roping in superior proposals during the period.
Just before the period concluded, Dell confirmed on March 25 the receipt of two rival bids from a consortium led by private-equity giant Blackstone Group, L.P. (BX) as well as a group led by billionaire investor Carl Icahn's Icahn Enterprises (IEP).
Icahn offered to acquire 58.1 percent of Dell at $15 per share in cash that provided shareholders who wish to participate in the ongoing upside of the company the opportunity to remain invested, with Dell continuing to be publicly traded on the Nasdaq.
However, the Blackstone-led group backed out of the deal on April 16, leaving the Icahn-led group to fight for a deal. Blackstone also offered a somewhat similar deal, offering cash and stock in excess of $14.25 per share for a part of Dell in a leveraged recapitalization transaction.
Southeastern Asset Management, beneficial owner of 8.4 percent of Dell, had then viewed both the rival bids as as superior primarily because each offers shareholders the opportunity to remain owners of Dell while also offering a higher cash price to owners who choose to exit their investment.
Southeastern and Icahn requested Dell to provide shareholders with the opportunity to vote for their proposal side-by-side with the 'going private deal' in a single meeting. They have also announced their intention to run a slate of directors at the Dell annual meeting if the current board does not agree to their proposal. They confirmed to implement their proposal if their slate of directors are installed on the board.
In Monday's regular trading session, DELL is currently trading at $13.41, down $0.03 or 0.26% on a volume of 0.53 million shares. In the past 52-week period, the stock has been trading in a range of $8.69 to $15.62.
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