Dell Inc.'s (DELL) special committee said activist investor Carl
Icahn's proposed tender offer for the computer maker isn't superior
to the $24.4 billion buyout offer from the company's founder that
is set for a vote on Thursday.
In a letter to stockholders, Dell's special committee said it
continues to believe a sale at a premium remains a superior option
to a leveraged recapitalization. The special committee also said it
is "unwise to layer substantial financial risk on a company already
facing significant challenges from competition and from the rapid
pace of technological change."
Mr. Icahn has raised more than $5 billion to finance his plan to
recapitalize Dell and last week, he enhanced his bid by adding a
warrant component. Mr. Icahn reaffirmed his call for the company to
launch a tender offer for 1.1 billion shares at $14 each, and added
a warrant for every four shares tendered, giving shareholders the
future right to purchase additional shares of Dell under certain
conditions at $20 a share.
Mr. Icahn has estimated the total value to tendering
shareholders would be about $15.50 to $18 a share, compared with
the $13.65-a-share go-private offer from the company's founder,
Michael Dell, and private equity firm Silver Lake Partners.
Dell's special committee said the addition of warrants to Mr.
Icahn's proposal hasn't meaningfully altered the value equation,
saying the warrants would be of modest value and would be partially
offset by their dilutive effect on the stub equity held by the
recipient. The special committee also said that Mr. Icahn's
proposed financing can't be accepted by Dell, noting the financing
is expressly conditioned on the election of all 12 of Mr. Icahn and
Southeastern Asset Management's nominees to the company's board.
The special committee also noted that Mr. Icahn's proposal
"cautions that his transaction might never be completed and offers
no remedies in the event that he or his nominees or financing
sources fail to consummate a transaction."
Mr. Icahn, Dell's second-largest shareholder behind Mr. Dell,
has repeatedly criticized the bid by founder and chief executive
Mr. Dell and Silver Lake Partners, saying the proposal undervalues
Dell's shares. Mr. Icahn looked to dispel Monday what he called a
"scare tactic" by Dell, saying he expects the ailing PC maker to
promptly hold an annual meeting in the event the proposed buyout
offer is voted down at Thursday's shareholder vote.
Shareholder-advisory group Institutional Shareholder Services
Inc., as well as Glass Lewis & Co. and Egan-Jones Proxy
Services, last week recommended Dell stockholders vote for the
buyout offer, improving the odds for Mr. Dell and Silver Lake.
Dell shares were down by two cents to $13 after hours. The stock
is up 28% since the start of the year.
Write to Nathalie Tadena at nathalie.tadena@dowjones.com
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