(Updates with S&P downgrade of Dell and the stock's closing
price.)
By Lauren Pollock
Dell Inc.'s (DELL) special committee sent another letter to
activist investor Carl Icahn and Southeastern Asset Management Inc.
seeking more information about their takeover proposal, reiterating
that the committee can't engage in talks until determining the
proposal to be credible.
In a letter last week, the committee said it wasn't clear
whether the offer is an "actual acquisition proposal" or an
alternative that should be considered if Dell's pending $24.4
billion sale to Silver Lake Partners and founder Michael Dell isn't
approved.
On Monday, the committee again said that unless the board
determines the alternative proposal reasonably could be expected to
result in a "superior proposal" to its existing deal, it isn't
permitted to provide information or engage in talks.
Mr. Icahn wasn't immediately available for comment.
Mr. Icahn and Southeastern proposed the alternative offer
earlier this month, saying they propose giving Dell shareholders
the option to keep holding stock in the company and take an
additional $12 a share in cash or stock. The cash-or-stock dividend
would cost more than $21 billion.
If the board doesn't back their offer, Mr. Icahn and
Southeastern said they would nominate new directors to replace
Dell's current board, raising the prospect of a proxy fight.
The proposal is part of the duo's campaign to upend a buyout
effort from Mr. Dell and private-equity firm Silver Lake. Mr. Dell
and Silver Lake struck an agreement in February to buy out
shareholders at $13.65 a share. Mr. Icahn, Southeastern and several
other large Dell shareholders have said the company is selling out
too cheaply.
Dell's special committee asked last week for a long list of
items from the pair, including a draft of a definitive agreement.
The committee also asked for information about how the deal would
be financed, arrangements to provide working capital or other
liquidity following the closing and who the senior management team
would be. Mr. Icahn also has said Mr. Dell is no longer the right
person to lead the company.
Dell also reported last week a 79% drop in fiscal first-quarter
earnings, missing Wall Street expectations, as the computer maker
posted weaker revenue in its computing segment. The quarter marked
Dell's sixth-straight period of year-over-year profit declines amid
an industrywide slump in personal-computer sales as tablets and
smartphones become more popular devices.
Dell's recent weak operating results prompted Standard &
Poor's Ratings Services Monday to downgrade the company's rating by
two notches. S&P cut Dell's rating to triple-B, placing it two
levels above junk territory, from A-minus. The rating remains on
watch for further downgrade. The ratings firm said its downgrade
also reflects expectations that highly competitive market
conditions and declining demand for PCs will continue to hurt
Dell's earnings and free operating cash flow in the near term.
Shares closed Monday up a penny at $13.41. The stock is up 32%
so far this year.
--Nathalie Tadena contributed to this article.
Write to Lauren Pollock at lauren.pollock@dowjones.com
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