Dell CEO agreed to lower shares' value to push $24 billion buyout
SAN FRANCISCO (Reuters) - Dell Inc Chief Executive Michael Dell, aiming to clinch a $24.4 billion deal to take the No. 3 PC maker private, agreed to value his 16 percent stake in the company at about 2 percent below the price offered to other shareholders, company filings on Thursday showed.
The founder, who informed his board in August of his intention to remove the struggling company from Wall Street's scrutiny, agreed after extensive negotiations that his equity stake would be valued at $13.36 a share, versus the $13.65 offered eventually.
Negotiations with Silver Lake kicked off in October. Dell revealed that the private equity firm raised its proposed offer price at least once during ensuing discussions.
"To facilitate a price increase by Silver Lake, Mr. Dell and related persons agreed that their shares to be rolled over in the proposed transaction would be valued only at $13.36 per share as opposed to the $13.65 price offered to the company's unaffiliated stockholders," the filing read.
The proposed leveraged buyout, the largest private-equity backed deal since the financial crisis, is being led by Michael Dell and Silver Lake, and pits Dell's board against the company's top independent investors.
Top two shareholders, Southeastern Asset Management and T. Rowe Price, have been among the most vocal opponents of the deal, which they say severely undervalues the company, despite the challenges it faces in a shrinking PC market and intense competition in enterprise software and services.
The deal is up for a shareholder vote around June or July, the company said in Thursday's filing. It will need a majority of shareholders, excluding Michael Dell, to be approved.
Dell's board, which formed a special review committee of independent directors after the CEO informed them of his intentions, is now conducting a 45-day "go-shop" period, actively soliciting higher bids.
Analysts do not expect rival bidders to step forward. Continued...