Dell board backs Michael Dell buyout offer; rejects Icahn’s bid as ‘unrealistic’
Activist investor Carl Icahn and Southeastern Asset Management have already started to shortlist candidates to become the new chief executive officer of Dell, including executives from IBM and Cisco Systems, in case they win their proxy battle against Dell founder Michael Dell and Silver Lake Partners, according to media reports.
Cisco Systems director Michael Capellas, former IBM services head Michael Daniels, Oracle Corp president Mark Hurd and Hewlett-Packard PC chief Todd Bradley are among the candidates being considered by Icahn and Southeastern even before the outcome of the proxy battle is determined, according to the Reuters news agency, which cited two unidentified sources.
The move comes as Icahn and Southeastern are locked in a battle with Dell and Silver Lake over the future of the PC maker. The company’s founder wants to take Dell private and has offered investors a buyout of $24.4 bn, backed by Silver Lake. Investors are to vote on July 18 at a special meeting held on the buyout proposal.
Icahn and partner Southeastern counter the Dell offer with a promise to pay $12 per share as a special dividend. The offer is below Dell’s offer, which works out to $13.65 a share, but the Icahn group would allow shareholders to keep their stakes so they could benefit from any turnaround in the company.
Earlier last week, however, the Dell board committee tasked with examining both offers said in a filing to the SEC that it recommends shareholders vote in favor of the Dell-led buyout. The committee pointed out that the per-share price of the Dell/Silver Lake offer is 25 percent above the closing price of January 11, 2013, the last trading day before the stock price was affected by rumors that the company founder was seeking to take it private.
‘We believe this transaction strengthens Dell’s capabilities to bring industry-leading, differentiated, simplified and easy-to-manage solutions to customers worldwide,’ the committee said in the filing.
The committee rejected the Icahn/Southeastern offer as ‘unrealistic.’ It said the company would not have enough money to offer a dividend of $12 per share and remain operational, and that Icahn would have to lower it to as little $8.50 per share to make it feasible.
Icahn and Southeastern, who own a combined stake of 13 percent in the computer maker, have promised a proxy battle to install their own directors if their proposal is rejected by the current board.
