--Dell warns market trends endanger transformation
--Company says Icahn counterproposal based on "unrealistic
multiples"
--Case made amid reports CEO would be asked to help raise offer
price
Dell Inc. (DELL) on Friday again told investors to accept Chief
Executive Michael Dell's $24.4 billion go-private proposal amid
reports the board is asking the founder to raise the deal's offer
price.
The company said the performance of rival Hewlett-Packard Co.
(HPQ) "has been superior to Dell's' and reiterated that trends
hurting the PC business could endanger Dell's planned
transformation into a more profitable information technology
provider, which it hopes to do by growing its portfolio of software
and services.
A buyout offer led by Mr. Dell and private equity firm Silver
Lake Partners would take those business risks off current
shareholders' shoulders, the company said.
Dell made its arguments in a slideshow prepared for investors
and filed with the Securities and Exchange Commission. The filing
comes a week before Institutional Shareholder Services, a firm that
advises investors on how to vote on company proxies, is expected to
release its analysis of the go-private offer. That review could
influence the outcome of shareholders' vote on the proposal
scheduled for July 18.
According to The Wall Street Journal, ISS's questions to Dell
management suggested that the firm was at least sympathetic to the
concerns raised by dissident shareholders Southeastern Asset
Management Inc. and Carl Icahn.
After a torrent of public filings promoting Mr. Dell's offer,
the company's special committee "will probably be a little more
quiet with the shareholder vote coming up in a couple of weeks,"
ISI Group analyst Brian Marshall said. "If they can convince
Michael to raise his bid a little bit, ultimately would look a
little bit sweeter in the eyes of shareholders."
Media reports have said Dell's board has quietly asked Mr. Dell
to raise the per-share offer price from $13.65 by using more of his
own wealth, a move that could head off the counteroffer from Mr.
Icahn and Southeastern Asset Management that plans to keep a slice
of the company publicly traded.
Mr. Icahn has said he has raised more than $5 billion to finance
his plan to recapitalize the ailing PC maker, a move he said should
end speculation that the funds wouldn't be available. Mr. Icahn
wasn't immediately available for comment Friday.
Dell on Friday said Mr. Icahn's proposal valued the company at
"unrealistic multiples" worth more than twice the current valuation
of H-P. The company also said PC exposure will likely continue to
weigh on its share price, creating "substantial downside risk" to
shareholders if the deal is rejected.
--Melodie Warner, Sharon Terlep, David Benoit and Shira Ovide
contributed to this article.
Write to Drew FitzGerald at andrew.fitzgerald@dowjones.com
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