The largest U.S. shareholder advisory firm recommended on Monday that Dell Inc stockholders vote in favor of Chief Executive Michael Dell’s $24.4 billion buyout offer, increasing the odds of his prevailing against billionaire investor Carl Icahn’s rival bid.<\/p>\n
Dell shareholders are scheduled to vote on the offer July 18. Several large investors have been pushing for improved terms.<\/p>\n
“The ISS seal of approval makes the Silver Lake\/Michael Dell deal more likely to receive shareholder approval,” Brian White, analyst at Topeka Capital Markets said, adding that ISS views Icahn’s bid “as coming with too much uncertainty.”<\/p>\n
Institutional Shareholder Services Inc is the biggest shareholder advisory firm, and its recommendations can sway investors looking for direction.<\/p>\n
ISS on Monday said Michael Dell’s offer “transfers the risk of the deteriorating PC business and the company’s ongoing business transformation to the buyout group.”<\/p>\n
It said shareholders cannot immediately accept Icahn’s bid even if they vote down Michael Dell’s proposed buyout.<\/p>\n
Another proxy advisory firm Egan-Jones also put out a report on Monday supporting Michael Dell<\/p>\n
Billionaire Carl Icahn and Southeastern Asset Management have made a rival bid that would see shareholders tender 1.1 billion shares at $14 each. But for the bid to be put to a vote, shareholders first must reject Michael Dell’s proposal and then elect a new slate of directors put up by Icahn.<\/p>\n
“They must also vote to replace the entire board and the CEO through a proxy contest at a subsequent annual meeting, and even then may end up with cash and equity if the envisioned self tender is oversubscribed,” ISS said.<\/p>\n
Icahn and Southeastern said they disagree with the ISS recommendation and would vote against Michael Dell’s buyout offer. The two partners reiterated that they believe the offer price of $13.65 undervalues the company.<\/p>\n
“Based on numerous conversations with our fellow Dell stockholders, we are confident that many of Dell’s significant owners share our view,” they said in a statement.<\/p>\n
Michael Dell has said the company’s shift from a computer maker to a provider of enterprise computing services is best done away from public scrutiny.<\/p>\n
Michael Dell, whose offer is backed by equity financing from buyout firm Silver Lake, does not plan to raise the $13.65 per share bid, people familiar with the matter said last week.<\/p>\n
Dell is investing aggressively in research and sales to retain customers as it looks to grab market share from established players such as International Business Machines Corp and Hewlett-Packard Co.<\/p>\n
Dell’s profit for the fiscal first quarter ended in April dropped 79 percent from a year earlier, and revenue fell 2 percent.<\/p>\n
The CEO owns 15.7 percent of the company he started in 1984 out of his college dorm room with $1,000. Under his take-private deal, Michael Dell and his investment firm would own 75.9 percent of the company, with Silver Lake owning the rest.<\/p>\n
Dell has said Michael Dell’s and Silver Lake’s post-buyout plan anticipated adding a significant number of sales personnel and boosting spending on research and development. And the restructuring plan envisioned would not be palatable to shareholders if carried out as a public company.<\/p>\n
Dell shares were up 3 percent to $13.42 in Nasdaq trading on Monday.<\/p>\n
Icahn promises $16 billion buy-back of Dell stock<\/a><\/strong><\/p>\n Icahn short on cash for Dell proposal: committee<\/strong><\/a><\/p>\n Dell presented with more alternatives to buyout<\/a><\/strong><\/p>\n